Getting Approved for Financing as a Startup

Navigating the complex world of startup financing can be daunting, but understanding the fundamentals and exploring your options can make a significant difference.

Defining a Startup Business

In the equipment financing industry, a startup is defined as a business – whether a sole proprietorship, LLC, or corporation – with less than two years of operational history since its state registration.

Understanding Startup Financing

Securing financing as a startup can be challenging. Startups often worry they won't get approved for loans, but the truth lies somewhere in between. While startups face more obstacles than well-established businesses, they do get approved with the right approach.

Exploring Financing Options Beyond Banks

Startups are considered riskier by lenders because they need time to establish proof of concept and demonstrate profitability. Without established business credit, startups often struggle to secure bank loans. Statistics from the US Bureau of Labor Statistics indicate that 20% of new businesses fail within the first two years, and 45% within the first five years, making banks cautious about lending to new ventures .

Finding a Supportive Equipment Financing Lender

Despite these obstacles, there are financing options beyond traditional banks. These alternative lenders consider more information, such as personal financial statements, personal credit history, and the asset being financed, to make informed credit decisions.

What Lenders Consider for Approval

To improve the chances of getting approved, lenders may also look at additional collateral, co-signers, industry experience, cash down, and a strong business plan. Presenting various strengths can significantly enhance approval prospects and result in more competitive terms.

Lowering Equipment Financing Costs

Generally, your credit quality will directly affect your financing costs. As a startup, it’s essential to demonstrate strength in other areas to reduce costs. Over time, as your business establishes a positive credit history and improves cash flow, financing costs are likely to decrease.

Consulting with Beacon Funding Experts

To discuss your startup’s financing options, visit beaconfunding.com/startup to schedule a conversation with a financing consultant. They can guide you through the process and help you find the best solutions tailored to your needs.