Small Business Loans for Young Entrepreneurs

Challenges for young entrepreneurs

Challenges for young entrepreneurs

One of the most common reasons why small businesses fail – regardless of the owner’s age – is a lack of capital or financing. Young entrepreneurs face this problem as lenders are reluctant to finance new businesses, perceiving increased risk. There are other options for young entrepreneurs, including small business grants, crowdfunding, and loans from friends and family. Here are some possibilities to explore.

Personal loans

Personal loans

In fact, you can take out a personal loan to finance a new or start-up business. A personal loan can help you get good credit, which is crucial when applying for a low-cost loan. Personal loans can include a line of credit (like credit cards) or a lump sum with fees and interest that you repay with regular payments.

There are several advantages to using a personal loan to finance your business. With a personal loan, you can use the funds at your leisure. You can put money into working capital, marketing, leasing, equipment, or other means to support your business. Personal loans often have a lower APR than a credit card, saving you money in the long run.

You must be aware of the disadvantages of using a personal loan for your business. First, you will not get tax credits for your interest payments as you would with a commercial loan. If your loan is secured, it will be tied to your personal assets. In the event of default, it is possible that the lender will seize these assets. You may also find that the amount of personal loans is too small for your needs. Business loans are often more important than personal loans.

Credit card

Credit card

Whether it’s a personal credit card or a business credit card, using a card to finance business expenses has its advantages. First of all, it’s easy. Credit cards are revolving credits. You can borrow up to your limit, pay and use again. You will avoid re-applying each time you need additional funds. Another benefit of using a credit card is that you establish a credit. Strong credit ratings are needed to secure a low-cost loan as your business grows. 

Business term loans

Business term loans

A commercial term loan is a lump sum of money repaid by regular payments at a fixed interest rate. The duration is the repayment term, usually one to five years. Term loans vary. The interest rate, the loan term and the loan size depend on your credit rating and your income. To learn more about term loans on the GlobalLoad Loans website, click here.

SBA loan 7 (a)

SBA loan 7 (a)

If you qualify, the low cost loan programs of the Small Business Administration may be your best option. SBA loans have low rates, long maturities and very low payments to fuel stability, growth and savings.

An SBA 7 (a) loan can be used for a variety of purposes.

  • Working Capital – Purchase equipment, increase inventories, add marketing programs, cover operating expenses to hire additional staff.
  • Debt Consolidation Loans – Refinance merchant cash advances, short-term commercial loans, high-rate commercial loans, daily or weekly payment loans or business credit cards.
  • Commercial Real Estate – Refinance an existing real estate mortgage, buy an office building or any other commercial space occupied by its owner.

SBA 7 (a) loans are known as the “gold standard” for small business financing. An SBA 7 (a) loan has several advantages over other options, including:

  • Low interest rates
  • Long terms
  • Very low monthly payments
  • Available for many uses
  • Can help create business credit
  • No prepayment penalty
  • Available all over the country

For detailed information on the SBA 7 (a) Loan Program, visit the GlobalLoad Small Business Blog and read our full article: What is an SBA Loan?

Requirements to apply for an SBA loan 7 (a)

Requirements to apply for an SBA loan 7 (a)

You must be 21 years of age or older when applying for an SBA loan. Apart from that, your age is not taken into account.

Lenders and loan programs have unique eligibility criteria for an SBA loan. For example, some lenders may need an action plan, others may not. (GlobalLoad loans do not require a business plan). The conditions for an SBA loan facilitated by GlobalLoad include:

  • Working time must be greater than 2 years
  • The personal credit rating of the business owner must be greater than 650.
  • The company must be based in the United States and belong to a US citizen or legal permanent resident who is at least 21 years of age
  • No outstanding tax privileges
  • No bankruptcy or seizure in the last 3 years
  • No recent transaction or transaction
  • Current on government loans