Starting a business can be exciting, but securing funding to bring your ideas to life can be challenging.
As an entrepreneur, you must have enough capital to get your business up and running.
Luckily, there are many financing options available for startups.
However, choosing the best loan for your business can be overwhelming.
In this post, we’ll compare the best startup business loans available to help you make the right decision for your business.
In addition, we’ll provide insights into the different types of loans, their eligibility criteria, and the pros and cons of each option.
So, don’t let the lack of funding hold you back from achieving your business goals.
Read on to learn about the best startup business loan options and start turning your business dreams into reality.
1. Myos – Best Startup Business Loan Overall
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Loan amount: €10.000 – 2.500.000
APR: Depending on your product score
Loan term: Up to 24 months
What is Myos?
Myos is an asset-based financial provider that helps global sellers grow their businesses.
You can get working capital loans ranging from £100,000 to £2,500,000, with a monthly interest rate based on the total amount borrowed.
It distinguishes itself from traditional lending practices by using AI to evaluate the market value of the products you sell, considering data from popular websites such as Amazon or Google Shopping.
Instead of requiring a personal guarantee, Myos approves the inventory or new orders of sellers as collateral. As a result, it makes the transaction faster, as there is no need for credit checks or extensive paperwork.
2. Kiva – Best Startup Business Loan for Crowdfunding
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Loan amount: $25–$15,000
APR: 0%
Loan term: 1-3 years
What is Kiva?
Kiva is a microlender that provides short-term, low-interest loans.
One of the most cost-effective choices is to take out a crowdfunded loan through their service because they charge no interest.
Kiva also welcomes business owners of all credit scores.
You also don’t have to be a US citizen or permanent resident to be eligible.
But sometimes, getting the money together takes over a month.
Microloans begin at $25, are unsecured, and have shorter repayment periods.
3. Iwoca: Flexi-Loan – Best Startup Business Loan for Flexible Loans
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Loan size: £1,000-£500,000
(£10,000 for businesses trading less than 12 months)
APR: 24%
Loan terms: 1 day to 2 years
What is The Iwoca Flexi-Loan?
The Iwoca Flexi-Loan is intended to bridge short-term funding gaps, with loan terms beginning within 24 hours.
Only when you withdraw the available funds is daily interest imposed.
There are no early repayment penalties, and you may be able to borrow more money quickly.
However, because of this flexibility, the Flexi-Loan has one of the higher interest rates and a maximum borrowing term of 2 years.
4. Fleximize Flexiloan Lite – Best Startup Business Loan for Short-Term Financing
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Loan size: £5,000-£500,000
Repayment term: 3-12 months
APR: Interest rates from 1.9% and 3.9%
What is The Flexiloan Lite?
The Flexiloan Lite is the best choice for startup businesses needing short-term financing. Monthly interest rates range between 1.9% and 3.9%.
However, this results in annual interest rates (AER) ranging from 25.3% to 58.3%.
Loan amounts are also limited to 2 months’ earnings.
So while you only need 6 months of trading history, loans require a monthly turnover of £5,000 (or £60,000 annually).
The loan is flexible, allowing for penalty-free overpayments while still allowing you to return the loan in full within the agreed-upon time.
5. Funding Circle – Best Startup Business Loan For SME
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Loan size: £10,000-£500,000
Repayment term: 2-6 years
APR: Interest rates at 7.9%
What is Funding Circle?
Funding Circle, a lending platform, offers loans to startup companies with yearly interest rates as low as 7.9% (fixed).
Depending on your business and circumstances, you can borrow from £10,000 to £500,000.
However, Funding Circle charges an ‘origination’ fee, the cost of which varies depending on the loan size.
That amount will be spread out over the life of the loan.
6. British Business Bank Start Up Loan For UK-residents
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Loan amount: £500 to £25,000
APR: 6% annually
Repayment terms: up to 5 years
What is The British Business Bank?
The British Business Bank has one of the most competitive yearly interest rates at 6% (fixed).
In addition, they give loans for non-profit purposes to new enterprises with no trading history.
Loans of £500 to £25,000 are available to new companies, with repayment terms of up to five years.
Furthermore, each selected candidate will receive free mentoring for an entire year.
There are no fees for securing or repaying the loan early, and no personal guarantee is necessary.
Securing a startup business loan can be crucial in launching or growing your business.
When choosing a loan, it’s essential to carefully review interest rates, repayment terms, fees, and the lender’s reputation.
Additionally, you should ensure that you have all the financial documents and collateral to increase your chances of approval and make repayments manageable.
Remember, taking on debt to finance your business is a big decision you shouldn’t take lightly. It’s crucial to only borrow what you can realistically repay and to communicate with your lender if you’re having trouble making payments.
By following these tips and conducting thorough research, you can secure the best startup business loan that fits your needs and helps your business thrive.
With the proper funding, dedication, and hard work, your startup can achieve its full potential and long-term success.
Read also : The Top 7 Bank Lending Alternatives to Consider
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