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How to Get a Loan if you are starting a business in California

How to Get a Loan if you are starting a business in California

Susan Spencer / May 25, 2017

You’ll probably need some kind of capital if you are looking to start a new business in California. Capital is meant to be the money that finances your business.

Undercapitalizing the business is one of the most common factors due to which many small businesses fail to manage a position. Therefore, you must make an estimate of the amount of money that you need to start your business in California.

Money is a critical issue for starting a new business in California.  The established companies have many options of business loans. But, if your California company is just getting off the ground, you’ll find that new business owners will hardly be able to get a start-up loan. Everyone is afraid of lending a hefty amount of money to a business that doesn’t even have a revenue yet.

There are plenty of options that you can choose to get a loan for your new business in California. We have researched some useful ways to find the best ways for you to get the loan.

Here are the ways:

Friends and Family: –

Lending some money from your friends or family is a most common way of financing that can help you start your new business. Your friends and family members will only need a guarantee from you that you’ll be able to pay them back. In such cases, you’ll not only face the financial failure but it will also affect your personal relation if you couldn’t pay back.

Try to make a list of your family members and friends who are aware of your plans and make sure that they are comfortable with the risks involved.

Credit Cards: –

Credit cards are also a useful way of financing the new business. You might be limited to secured credit cards if your credit isn’t stellar. In such case, the fees for the credit card will be higher than regular credit cards.

You must keep in mind that this is an expensive way of financing, especially if you have bad credit. Because card issuers consider your personal credit scores in order to determine the annual percentage. And research has shown that chances of failure are higher in new businesses that depend heavily on credit card financing.

Crowdfunding: –

It is commonly known for funding new businesses. Sites like Indiegogo and Kickstarter can help you solicit funds with the help of online campaigns. This system is also known as rewards crowdfunding because you give gifts to your donors instead of paying back.

Business owners who want to test the market and validate the opportunity will find it a useful approach.

Grants: –

Grants from government agencies and private foundations are a great way of financing your new business. It’s not always easy to get these grants approved, but you can get them approved based on particular circumstances. For instance, you can access small business grants for veterans if you have worked in the U.S military.

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