Start-ups And Loans
Start-ups with little assets and track record might face challenges when applying for loans.
• Start-ups are usually funded by the owners and business partners.
dig deep into their own savings and personal credit lines, and they
tap on funds from
friends and family.
How Lenders View Start-Ups
• It is difficult for start-ups to get loans from banks and financial institutions.
• With few assets, limited cash and no prior track record, lenders view start-ups as extremely
• To get a loan, start-ups must be prepared to put up assets as collateral.
owners often have to give personal guarantees, with some even
putting up their family
home as assets.
Start-ups must present a business plan. You are likely to have to
convince the bank, through
presentations of business plans and financial projections, that your business is viable and will
lead to positive cash flow.
Start-ups will find it easier to apply for working capital loans
rather than for fixed asset
asset term loans are viewed as riskier for new firms because of the
periods and the larger amounts being loaned.