Should You Get A Business Loan To Start A Business?

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Many people from my apps write to me and ask whether they should take out a loan to start their business, and how they can get a loan to start their business.  Loans are certainly a viable option to start a business, but it is quite a risky option. In this article I will weigh the pros and cons of getting a loan to fund your business, and explain how you can get a loan, and offer additional ways to raise money so that loans are not your only option.

Getting A Business Loan Is Risky

Keep in mind that most businesses eventually fail. And no entrepreneur thinks that their business will fail when they start that business.  So most entrepreneurs get blindsided when their company begins to face trouble and go out of business. So if they took a loan, that loan money is likely lost, and needs to be paid back. So not only does the business fail, but the entrepreneur still has to pay back that large loan.

Business Loan Or Personal Loan

If your business has not started yet, and you are just planning it, it is very difficult to get an actual business loan. Banks certainly won’t lend money to businesses which have not started. So what most entrepreneurs have to do is take a personal loan and put that money towards their business. So the money you risk is your money, not the business’s money.

How To Get A Business Loan Before You Start

There are a few options to get a loan for your business before you start the actual business. Some of the options are micro-loan companies like Lendio, Prosper, or Kiva. We partnered with Lendio to help provide our app users loans. If you are curious about getting a business loan, you can see if you are eligible for a business loan with Lendio by filling out this form. They will try to match the information you provide with a lender and get you a loan.  Other sources for loans, are of course, sites such as sba.gov. And here is a video tutorial for how to get business loans.

Business Loans With Bad Credit History

If you have a bad credit history, getting a small business loan becomes much harder. One way to overcome this challenge is not to go after a loan right away. You will get terrible terms if you try to get a business loan with bad credit history. So instead, you should try to build momentum for your company and grow it. The health and growth of the business will offset the problem of the bad personal credit history. Here is a video on this issue.

Here is a tutorial on whether it is possible to get a business loan if you have bad credit history.

Other Ways To Raise Money

Loans are not the only game in town. You can raise money by getting an investment, donation, grants, or trying various creative things as a part of your fundraising efforts. Here is a video with tips for some creative things you can do to raise money.

And here is a video with seven different fundraising ideas you can try.

Further Business Resources

For more business-starting resources, please take a look at our business planning mobile apps. Here is the iOS business plan app and here is the Android business plan app.  Additionally, here is the iOS fundraising app. And here is the Android fundraising app. And here are our business apps on the Kindle. And here is an article where I give the argument that our Android apps are the best business apps on Android.

And please check out and subscribe to my YouTube channel where we cover many marketing topics.

Author: Alex Genadinik

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