Small Business Startup Loans In Maine – Our goal here at Credible Operations, Inc., NMLS Number 1681276, hereinafter referred to as “Credible,” is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who compensate us for our services, all opinions are our own.
Startup business loans can help you finance your new venture, but they can be difficult to qualify for. (Shutterstock)
Small Business Startup Loans In Maine
Your new business may start small, but that doesn’t mean you’re making a small investment. New businesses often cost thousands of dollars: an inc. A magazine survey of fast-growing companies found that 42% of startups in 2018 needed $5,000 or less, while 21% needed between $5,000 and $25,000.
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Although relatively small compared to the millions of dollars some companies raise, these amounts can be difficult for some new entrepreneurs to comfortably spend. This is why some business owners are applying for new business loans. In this article, we will consider how they work.
A personal loan can also be an option to cover business expenses. Visit Credible to learn more about personal loans and see your preset rates.
Start-up business loans are loans to early-stage businesses to help them grow. They can come from banks or credit unions, or through a state or local government program. You borrow a certain amount of money for business expenses and use the money you earn through your business to pay off your creditor.
Because new businesses are inherently risky, qualifying for small business startup loans can be difficult. Lenders will scrutinize your business plan, expenses, bank statements and financial projections before deciding whether to offer you money. They will also assess what are known as the five Cs:
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Your lender may have stricter requirements about what your startup business loan can be used for. Before applying for a loan, make sure you have a detailed list of the expenses you expect to incur and how much each one will cost.
Probably not. While long-standing businesses can use their financial history to help get credit, a new business only has credit from its owners. According to the US Small Business Administration, bad credit is the number one reason loan applications are denied.
When starting your business, you may have several options for loans. Each type has its own criteria for how much you can borrow and who is eligible.
Microloans through the US Small Business Administration allow for-profit business owners to borrow up to $50,000 to start or expand their business. The loans do not come directly from the federal government; instead, the SBA funds specially designated nonprofit community lenders that make loans.
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Each lender may have their own criteria for who qualifies for an SBA microloan and may also have collateral requirements. The payment terms of the microcredit program vary from borrower to borrower, but the maximum loan term is six years.
You can use an SBA microloan for most start-up costs, including working capital, inventory, supplies, equipment and machinery. You can no longer use these loans to pay off debt or buy real estate.
If you need to borrow a little more, an SBA 7(a) loan may be a better option. This loan program is the SBA’s most popular and allows you to borrow up to $5 million. If you are buying real estate as part of your business startup, SBA 7(a) loans may be a good option. You can also use a 7(a) loan to purchase working capital, fixtures and equipment, and refinance current business debt.
You can use these SBA loans to start a new business or buy an existing business. You will usually repay the loan in monthly installments and your loan may have a fixed or variable interest rate.
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While many types of small business loans can be collateral-based, asset-based financing uses the value of your business’s assets as the basis for making the loan. If your business has a lot of inventory, equipment, or machinery that you can use as collateral, asset-based loans can be a good option. You can use line of credit to expand or manage your cash flow. But if you fail to make your payments, your lender can foreclose – which can make it very difficult for your business to move forward.
You can choose to take a personal loan and use the money to start your business. Lenders will usually make these loans to you as an individual, not your business, and will rely on your personal credit history to make a credit decision. Depending on your income and credit history, you can borrow as little as $1,000 or as much as $50,000 or more.
The better your credit score, the lower the interest rate you will generally qualify for. If your personal finances are in good shape and you don’t have a business that qualifies for traditional small business financing, these loans can be a good option.
While the process varies slightly by lender, here are the general steps you’ll follow to apply for a startup business loan:
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If you’re ready to apply for a loan, Credible lets you easily compare personal loan rates from multiple lenders in minutes.
Taking out a loan to start a new business is generally not a good idea. While debt financing has its place in the small business world, new businesses are inherently risky.
According to the Small Business Administration, about one-third of startups fail within the first two years, and more than half of small businesses close within five years. Monthly loan payments can stretch your new business budget and ultimately put your personal finances at risk.
A small business startup loan can work best if you have a solid business plan, years of industry experience, and contracts or purchase orders that will generate immediate revenue. But in most cases, it’s a better idea to explore other financing options rather than turning to loans.
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Loans are not your only option for financing your new business. In fact, loans make up a relatively small percentage of how new businesses are financed—about 20%, according to the SBA. Here are some other financing options startups should consider before applying for a loan: Photo / Maureen Milliken As small businesses across the state begin to reopen, a variety of financial resources are available to help them stay afloat during the COVID-19 crisis.
As the state slowly begins to reopen, small businesses are increasingly looking for resources to help them stay afloat during the COVID-19 crisis. Over the past month, state and local governments and organizations have announced a variety of grants across Maine.
This is not an exhaustive list of everything offered in Maine. More resources for businesses can be found on the Maine State Chamber of Commerce website and the Maine Development Fund website.
Portland launched three emergency business assistance programs earlier this month, funded at the City Council’s May 18 meeting.
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A business must be located in Portland to be eligible to apply for funding, and the application deadline is June 4. Businesses that have received COVID-19 funding from the US Small Business Administration and/or state FAME commercial funding programs are not eligible. Any business with questions about these programs should contact Nelle Hanig, business program manager, Department of Economic Development, at [email protected] Information is also available on the city’s website.
Coastal Enterprises Inc., Community Concepts Finance Corp. and MaineStream Finance offers loan products backed by Small Business Administration money to help Maine businesses access the capital they need to rebuild. A trio of organizations provide loans of up to $50,000.
Loans may include up to six months of payment and interest coverage by the SBA, have no prepayment penalties, and are available until September 27 or until the money runs out, whichever comes first. Small businesses can use loans to meet capital needs or normal operating expenses. Funded businesses will also have access to technical assistance, coaching and training from the organizations’ business advisory services.
Each of the three organizations has developed separate terms and conditions for the refinance product. Businesses interested in a recovery product should contact the presenting organization directly for complete product details and underwriting requirements. Completed applications will be considered in the order they are submitted, with a two-week deadline.
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Earlier this month, the Greater Portland Council of Governments launched a rapid response microloan program to support the region’s small businesses and nonprofits in need of working capital amid the COVID-19 crisis.
Eligible businesses and organizations are eligible for loans of up to $10,000 at 0% interest for the first two years. Portions of the loan can be forgiven if businesses meet certain requirements or participate in other GPCOG initiatives.
The agency has committed to providing up to $250,000 in loans through the new program, which will run until Dec. 31 or until the money runs out. The loans will complement state and federal small business loan programs offered by the Small Business Administration and the Maine Financial Institution.
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