One of the toughest tasks a business owner can face is financing a startup business. You would need more than a well-written business plan and a wonderful idea to get a startup loan. Stress while applying for a startup loan in banks is the norm. Apart from expanding your existing business, you could also use your startup loan to venture into other businesses. What startup loan is, businesses you can venture into, etc are all-inclusive in this article.
What is a startup loan?
A startup loan is the personal loan that you can use to start a new business or grow an existing business. They designed the startup loan for businesses that have been trading for less than 24 months.
What are the businesses I can venture into with my start-up loan in Ghana?
The start-up loan obviously helps to get you up and running a business.
The following are some businesses you can venture into with your start-up loan:
- Taxi business
- Poultry farming
- Fish farming
- Frozen food shop
- Snail farming
- Make-up business
Where can I get a startup loan in Ghana?
You have to generate some funds before you can startup a business. Without these funds your dream of having a startup business would just be fluke.
The following are where you can get a startup loan:
- From your bank
- Small business grants and loans
- Business plan or entrepreneurship competition
- Angel investors
- Personal savings
- Family and friends
What are the reasons banks could deny me a startup loan?
With the current economic situation all over the world, it’s nearly impossible to run your startup business with your money. Therefore, this is the major reason startup business owners need startup loans for their businesses.
The following are few reasons a bank can deny you a startup loan:
- Insufficient collateral
They can deny you a startup loan if your startup business has a little or no collateral to secure the loan
- Lack of a management team
Banks can deny you a startup loan if your startup business doesn’t have a strong
management team that has experience.
- Bad credit score
If your startup business has a good credit rating, you could stand a better chance to get the loan. Although, it doesn’t mean you can get a business loan immediately with a good credit loan. Instead, it means that it’ll place you on a higher ground to contest for the loan. Because of this, they will not reject your loan request quickly.
Other reasons banks can deny you a start up loan are:
- Debt-to-income ratio
- Lack of consistent cash flow
- Customer concentrations
- Personal guarantees
Would a bad credit score affect my chances of getting a start up loan?
You might wonder if your startup business can get a loan with a bad credit score. Bad credit score of your business would toughen your chances to borrow money from any bank. Because of this, a bad credit loan they designed for businesses would be the best alternative to a startup loan. This is because many lenders look to offer loans to startups who could struggle to access loans because of a bad credit score. They only offer that type of startup loan to businesses that have good valuable assets.
Capital is essential to start-up a business. You would most times find it very stressful to get a loan from banks. And once you get the loan, you can now spend it on equipment, stock, marketing, etc. Startup businesses no longer have so much to worry about finances with the presence of startup loans. All startups must ensure they repay all the loans they owe. Because of this, they will get such loans in the future against unforeseen circumstances.