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As you probably already know, there are a wide variety of business credit institutions and services at the disposal of new entrepreneurs looking to start financing their businesses. Each one has their own purpose, strengths and weaknesses.
The most obvious and commonly used of these is the business credit card. Business credit cards act like personal credit cards, with comparable perks and benefits, much higher balances, and typically a higher interest rate. Business credit cards are challenging to get at first; of the 500 or so business credit card lenders, only about 60 will extend credit to start-up businesses.
You can also apply for lines of business credit. Institutions and services (primarily banks) have many programs set up that make revolving lines of credit readily available to consumers. These work very similarly to credit cards; the bank provides a credit line with a certain balance that can be spent at the borrower’s discretion, and it carries a monthly, non-amortized interest rate for which payments must be made.
In the world of mortgages, there are plenty of options available for borrowers. All banks offer some sort of fixed rate business loan program, although new entrepreneurs should look to small banks and credit unions for their financing needs, as they will have less chance of being turned away by the big banks’ strict rules and regulations, and have a greater chance of speaking with somebody that actually carries some weight in the decision making process.
Of all the business credit institutions and services, none are more helpful to new entrepreneurs than the Small Business Administration (SBA). The SBA is a branch of the department of commerce which helps guarantee loans for veterans, women, minorities, and start-up businesses. They are the largest guaranteer of loans in the country and have a portfolio of over $45 billion. See if your local bank issues any SBA programs, as they will be very likely to help you out with getting started.
