If you run a startup, you might need financing, either to start or to grow. But unlike with established businesses, you might not qualify for more traditional financing options.

One of the biggest challenges a new small business must face is obtaining the capital necessary to support its initial growth. New employer small businesses are the primary source of U.S. job growth but are much more likely than larger firms to face financial challenges accessing borrowed capital. In order to proudly turn on your physical or metaphorical “open for business” sign, you may need to have access to money in the form of a small business startup loan.

What is a Startup Business Loan?

A business startup loan is financing meant to help with the financial needs of a new business. Startup business loans can go towards things like working capital; the purchase of equipment, machinery, supplies, inventory, and furniture; and the purchase of construction equipment or real estate. New business owners can also consider business credit cards, certain SBA loans, and crowdfunding, among other options.

If you’ve already started your hunt for a loan, you’re well aware that there is a seemingly infinite amount of small business lines of credit and loans out there, available from banks and online lenders. Each one will come with its own set of pros and cons, and perhaps you’ve discovered that most of the low-cost options are not available to new business owners without a couple of years of business under their belts, strong credit, and/or solid revenues.

While a bank loan may be your first choice, for the majority of startup businesses, a traditional loan will be out of reach. Banks have strict small business lending standards, and what they offer is often not available to brand new businesses. You may, however, be able to work with your bank to secure equipment financing or other types of business funding if you have a solid business plan in an industry the bank serves. If you are unsuccessful in getting a bank loan for startup costs, there are other lending partners to consider:

How a Startup Business Loan Can Grow Your Small Business

You need to think outside the box when looking for financing for an early-stage business. Although the SBA does offer some financing to startups, you are more likely to find success from other sources. Equipment financing is a good payday loans in Somerville example of this. In situations where you simply need cash, financing (or leasing) the equipment you need allows you to free up cash for those things you can’t finance. And, because the equipment is often considered the collateral for the loan, if you have a good personal credit score, it’s easier financing to qualify for than a traditional term loan.

1. Equipment Financing

Specifically designed to pay for the purchase of equipment and machinery, equipment loans are similar in structure to conventional loans, with monthly repayment terms over a set period of time. However, the proceeds are used to purchase equipment or machinery.

The lending standards on equipment financing can be less strict because your equipment will be used as collateral for the loan-in other words, if you default, the bank has the right to seize your equipment to cover the cost of their lost money. (Note that some SBA loans ent. In particular, the SBA 504 loan is helpful for financing larger equipment and real estate purchases.)

Equipment leasing is another option that you should consider. Keep in mind that many different assets you use in your business may be leased, including computers, a pizza oven, or even the furniture in your restaurant.