How to Get a Loan for a Company You Haven't Started Yet

You can get a loan for a business you haven’t started yet by making a case to the lender so they want to invest in you. Your case should include a strong business plan, assets to put up as collateral, and potentially a personal guarantee. There are multiple types of small business loans that you can apply for, including entrepreneur and start-up financing, short-term business loans, and SBA loans.

The process to get a business loan without having an existing business is:

Research lenders.

Prepare the needed documents.

Apply online.

Try the next lender if you get rejected.

Try applying for a different type of loan.

The process is simple and quick when you’re prepared. Some lenders, like our partners, may approve and fund you within a couple of business days, while large banks and traditional financial institutions may hold you in limbo for weeks. If you’re ready to start the process, here are some more details, so you can submit your new business loan application with confidence.

Research Lenders

You may have a lender recommended to you by a colleague or friend. Make sure to ask them what they included in their loan application and if the person reviewing needed anything specific to provide the approval. This gives you an upper hand because you’re providing additional confidence builders on top of the standard documents that are expected.

But remember, each situation is different and your peer may have already had their business running. That gives them an advantage because they have a business financial history to refer back to and forecast from.

If you’re wondering where to apply, the best approach is to have a mix of lenders in mind, including:

One large bank

An alternative lender

A local bank

There is no rule saying you cannot apply to multiple lenders. Just keep in mind that some may do soft inquiries while others may perform hard inquiries, which could impact your credit score. If you get approved by more than one, you now have options and may be able to negotiate better loan terms.

Read online reviews, but keep in mind that many people only leave reviews if they have a bad experience. It may not reflect the lender’s actual business practices. Go to local start-up and commerce meetings and ask other attendees if they’ve had any experience with the lenders you want to apply with. They may share new options you hadn’t considered or heard of.

If you find a forum and discover that multiple people got rejected, find out the reasons why. This gives you the opportunity to figure out how to counter a potential rejection. You can also use a given lender’s live chat feature and ask about requirements for approval, preferred formatting, and the types of supplemental materials the lender will accept.

Prepare Your Documents

Because you do not have an existing business with a financial history and tax returns, you need to have other strong documentation to make a case as to why the lender should loan money to your new business. Plus, you need to provide the standard documents that the lender requires.

Start by writing to their customer support team and explain that you’re looking for a loan for a business you are starting. Ask them what documents are needed and which new business loan options they have available. This lets you create a checklist that you can refer to, helping ensure you submit a complete application.

In addition to what is required by the lender, the following may help you build their confidence and get you the funding you want:

A strong business plan: Having a roadmap that shows your potential growth and market share is a first step in building the lender’s confidence. Make sure to include how you’re going to market, the ways that the funding will be used, and how you plan to reach profitability and growth. Financial projections and numbers can go a long way here and show you’re mindful of using their money wisely.

Assets for collateral: Having assets you can put up as collateral–like machines that depreciate slowly and are easy to resell, real estate, and even vehicles–can build confidence in the lender. These assets can be sold by the lender to recoup their losses if you default. Make sure to include these items, their resale values, and the current demand for them in your application.

Shortlistings on RFPs: If you began pitching clients and have been shortlisted for projects, this lays the groundwork for your business to succeed and helps build lender confidence.

Contracts: If you have signed contracts or letters of intent from customers/clients, this shows that you’ll have money coming in shortly, telling the lender that you can begin paying back the business loan easily.

Relevant experience: When you’ve worked in the industry, managed similar businesses, and had successes, this shows your business acumen and knowledge of the space. Bring details of your experience and possibly include letters from established business owners who will vouch for you.

Personal guarantees: Much like the assets for collateral, personal guarantees can build trust with lenders. You can leverage savings accounts, your home, investment accounts, and other assets.

Your credit scores: A last confidence builder is to have both good business and personal credit scores. They demonstrate fiscal responsibility, which helps build trust with lenders.

Apply Online

Now that you have your lenders selected and documentation in order, this is the easy part. Go to the right loans page on the lender’s website and fill out their form. To ensure you get an accurate loan decision, do your best to fill in each field, avoid typos, and provide all of the requested documents.

Application errors and missing documents can lead to rejections, so take your time and be as accurate as possible. It doesn’t hurt to double-check all forms and attachments before clicking submit.

Try the Next Lenders if You Get Rejected

If you get rejected, don’t stress. It happens to even the most experienced entrepreneurs and successful businesses when they’re starting a new chapter. You can try applying a second time with the same lender, if they let you know why you got rejected and you resolve the issue, or you could move on to other lenders that provide a similar loan product and terms.

Try a Different Type of Business Loan

As a business owner, you’ll be faced with multiple challenges. Getting rejected for a loan because your business is not live yet is just another one. There are other ways to get your business financed and launched. For starters, try a different loan type.