SBA Loan Alternatives & the Best Small Business Loans for Startups
Updated: Sep 22
Securing the funds needed to launch, grow, and sustain themselves has always been one of the biggest challenges startup businesses face. Many small business owners end up applying for a Small Business Administration (SBA) loan to help get their physical and metaphorical “open for business” sign up, and there are a variety of SBA loan options that are available.
Although SBA loans tend to be the most popular and well-known of all startup business loans, that doesn’t mean these SBA loan alternatives aren’t great in their own right. In fact, some of these alternatives are some of the best small business loans for startups.
What is a Startup Business Loan?
A small business startup loan can refer to any of the financing options available to a business with little to no history. Some of the best small business loans for startups include asset-based financing, business credit cards, personal loans for business, small business grants, crowdfunding, and funding from friends and family. We’ll go into detail on each of these SBA loan alternatives below.
Types of SBA Loan Alternatives for Startups
Asset-based Financing
Asset-based financing is one of the best small business loans for startups that have very specific needs for purchasing equipment or paying off outstanding invoices that have piled up. Asset-based financing is often called “equipment financing” since small businesses often use it to secure the funds for purchasing equipment like computers, furniture, vehicles, kitchen equipment, and more. These loans can be secured through equipment financing and leasing companies like Crest Capital and Balboa Capital.
Unsecured Loans
In contrast to a secured loan, an unsecured loan does not require collateral, making this an excellent option for individuals who are just getting started and need capital to get off the ground. With this loan, you can borrow on your name and established credit history, so if your credit score is 700+ and you have some form of verifiable income, unsecured business loans could be a great SBA alternative for you.
Business Credit Cards
Business credit cards are one of the best SBA loan alternatives because most issuers don’t have requirements for how long applying businesses have been in operation. The minimum requirements are easy to meet, meaning a startup can get fast access to a line of credit. Business credit cards are offered by many of the most popular payment card services like Chase, American Express, and Capital One.
Personal Loans for Businesses
Personal loans can be taken out for a wide variety of reasons, and funding your new startup is certainly one of them! They’re a great SBA loan alternative because you can decide exactly how to spend the money, and it doesn’t require collateral.
Small Business Grants
Small business grants can be hard to land, but if you do win one, you won’t have to repay any of the funding. These grants are available from the federal government, state and local governments, private foundations, and businesses that support entrepreneurship. Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs can also help certain small businesses.
Crowdfunding
Crowdfunding platforms like Kickstarter and Indiegogo are some of the most well-known SBA loan alternatives among the public and can help get a startup off the ground, provided owners can share their goals, objectives, and vision effectively. There are also platforms like Kiva specifically for students and low-income entrepreneurs to get their projects funded and Wefunder, which connects startups with investors.
Friends and Family
Business owners that have a network of friends and family that are willing to invest will find their connections to be a good source of funding.
Jumpstart Finance is a firm with 30+ years of aggregated experience supporting small business owners find non-SBA capital that fits their needs. Submit your inquiry here and connect with a Loan Advisor today.
