Commercial bank loans don't require entrepreneurs to turn over equity or company control. In general, banks prefer to make loans of more than $10,000. Banks like to see:
- Good credit
- A solid business plan
- Ability to repay the loan
Line of Credit is an arrangement in which a bank extends a specified amount of credit to a specified borrower for a specified time period. A line of credit is best suited to help cover expenses that tend to fluctuate throughout the course of a year.
Home equity loans are a cost-effective alternative to other types of loans because they offer good interest rates available. But you may not want to risk your family home to launch your business venture.
Equipment lease financing gives you access to many types of equipment -- computers, copiers, fax machines, cars and trucks -- without tying up your cash or credit lines. Although it doesn't bring in cash, leasing reduces the amount of cash you otherwise have to raise to start.
Cash advances from credit cards are an easy and quick way to gain access to cash. But as a long-term financing method, they can be expensive -- credit card interest rates typically run much more than you would likely pay on a bank loan.
Factoring allows a company to "sell" its accounts receivables to an outside company at a discounted rate. This allows the company to receive funds immediately to fund operations and ease cash flow. Factoring is done by private companies.
Special State Loan Funds
In addition to commercial loans available through local banks, there are a number of loan programs in Missouri and Kansas that support special needs.
Many banks work with the SBA to provide small business loans. Click for a summary of these loan products.
Kansas City has a variety of capital options through savings banks, savings and loan associations and commercial banks. As a regulated industry, banks are limited in investment options and most early-stage companies don’t have the collateral required for bank loans. Consequently, micro and other alternative loan options have developed to support early-stage, higher-risk entrepreneurs, expanding debt financing beyond regulated banks. These products serve both to support business operations and to improve the credit score of individuals creating businesses to better position them to qualify for other funding options.