There's nothing more disheartening than having a great business idea but not having enough money to fund it. But you don't have to set your dream aside just because you don't have enough capital right now. Our team at Asphalt Kingdom has rounded up some of the best ways on how to finance a new business so you can get started this season.
U.S. Government Small Business Loans
The U.S. government, via the Small Business Administration, offers financial support to individuals planning to start or expand a business. Keep in mind, though, that you will not receive money from the agency directly.
What the agency does instead is connect you with participating lenders and guarantee a percentage of the loan for you. The agency will also pay the lender in case you default on your loan.
There are three different types of SBA loans for small business owners: microloans, 504 Loans, and 7(a) Loans. If you're planning to borrow less than $50,000, then check out Microloans.
504 Loans are geared towards businesses that need long-term and fixed-rate financing for equipment purchase or repair. It can also be used to build a new facility or improve an existing one. But before you can apply for a loan, you have to find an approved Certified Development Company. Learn more about 504 loans here.
Lastly, there's the 7(a) Loan. This is ideal for business owners who need some working capital or those who want to buy much-needed business supplies. You can borrow as little as $500 to as much as $5.5 million for your asphalt maintenance business.
These loans are geared toward people who are not usually qualified for regular bank loans.
If you want to learn more about U.S. Small Business Administration loans and see if you are eligible, then check out the agency’s website.
ClickLease, a Utah-based payment solution company, is Asphalt Kingdom's newest equipment financing partner. The company offers affordable financing options for sealcoating and crack repair supplies and equipment sold in the Asphalt Kingdom store.
Just like the U.S. Small Business Administration, ClickLease targets business owners who are not qualified for loans offered by banks. It's possible to qualify with ClickLease even if you have bad or non-existent credit.
Your application will be instantly approved if you're purchasing supplies and equipment up to $20,000, and it allows you to adjust the payment and terms. Lease payments may also be written off as a business expense.
When you shop for asphalt equipment at the Asphalt Kingdom website, you have the option to check out the equipment directly if you have the funds or click Apply Now if you want to finance it via ClickLease. After clicking Apply Now, you'll be taken to the ClickLease website so you can start the application process.
ClickLease will need crucial information from you, including your business information and the owner or guarantor information. You also need to provide the address where the equipment will be installed or delivered.
To learn more about the ClickLease and Asphalt Kingdom partnership and what it can do for asphalt maintenance contractors, then learn more about asphalt business financing through ClickLease.
The Funding Booth
Applying to The Funding Booth is another financing option that small sealcoating business owners can explore. The company, which is based in Los Angeles, specializes in equipment, truck and trailer, and working capital loans.
To apply for equipment financing or working capital loans, simply go to The Funding Booth website and choose the loan that applies to you. Keep in mind that while The Funding Booth specializes in serving borrowers that traditional financial institutions can't serve, it still has eligibility requirements that you need to fulfill.
When applying for a loan with The Funding Booth, simply provide your personal and business information, equipment details, and the cost of the equipment you're planning to purchase. You also need to provide three months of bank statements.
Remember that The Funding Booth can fund loans up to $500,000. You don't need a guarantor to apply for working capital loans/equipment financing, and the company offers terms of up to 84 months.
Check out The Funding Booth website for additional information on working capital and equipment loans.
We all know PayPal as an online payment system, but did you know that it also offers loans? PayPal offers Business loans and Working Capital loans to small business owners like you. So what are the differences between these two products?
PayPal Working Capital loan is geared towards users who have been using their PayPal Premier and Business accounts for more than three months. If you have a Premier account, you should also have at least $20,000 sales in PayPal during the past year. But if you have a Business account, then you need to have at least $15,000 in PayPal sales.
Business owners who have been approved for a Working Capital loan only need to repay a fixed fee with their PayPal sales. If you're looking for a loan product that doesn't have late fees, penalties, interests, and other fees, then this is for you.
In addition, there's no credit check, and there's no need for collateral when you apply for this loan. PayPal also doesn't require a personal guarantee for you to qualify.
The requirements for a PayPal Business loan are more stringent than a Working Capital loan. If you want to apply for a PayPal Business loan, then make sure that you have signed up for a business account. What makes it different from Working Capital loans is that it requires borrowers to provide their credit score (minimum of 550).
Your business needs to be in operation for a minimum of nine months, and it should have at least $42,000 in annual revenue. Borrowers should not have personal bankruptcies and should have a personal guarantor.
Business owners can borrow anywhere between $1,000 and $125,000 with PayPal Working Capital, and $5,000 to $500,000 for PayPal Business loans.
Another way you can finance equipment is through PayPal Credit.
Think of it as a credit card without an actual physical card. PayPal Credit is already integrated into the merchants' checkout page (including Asphalt Kingdom's) so you can purchase your chosen equipment minus the hassle.
If you use PayPal frequently and you need a reusable line of credit, then this is a good option for you. Other benefits include 0% interest when you pay off your purchase within six months (for items priced $99 and beyond) and no annual fees.
Keep in mind that at the time of writing there is an annual percentage rate of 23.99%. In addition, PayPal will need you to provide some personal information to check if you qualify.
Another avenue you can explore are banks that offer traditional small business loans. They can offer lines of credit, term loans, working capital loans, and equipment loans, just to name a few.
But applying for a traditional bank loan is a whole different ball game altogether compared to the ones we mentioned above. With bank loans, you need to provide crucial details about your personal finances and business standing to qualify. These include your personal and business credit score, bank statements, EIN, proof of collateral, and tax returns.
You will need to submit a business plan and proof of collateral, as well as disclose any debts you may have. Keep in mind that the requirements will vary depending on the bank.
Banks provide relatively low interest rates and offer a broad range of loan products to small business owners. But the paperwork can be quite lengthy, and you have to wait for weeks or months before the bank finally decides to approve or reject your loan. Plus, you'll need a personal guarantee and a stellar credit score to qualify.
One of the easiest ways to purchase new equipment is by using your personal or business credit card. It’s standard practice for many businesses to purchase essential supplies via credit card, so why not get a crack fill machine or an infrared asphalt heater through it? Asphalt Kingdom also offers this option for business owners who are buying a simple parking lot stencil or a brand new line striper.
Using a business credit card to finance your new equipment is easy and convenient. Plus, it's a great way to build credit, as well as get cash backs or points with every purchase.
But keep in mind that there are cons to using it, too. Credit card interest rates are substantially higher than other financing options, and there are penalties for paying your bill beyond the due date. If you're not careful, overspending and late payments can even damage your credit score.
Loans From Family and Friends
Last but not least are loans from your family or friends. If you're the type of person who doesn't like borrowing funds from family and friends, then perhaps you'd like to consider this option now. There are several advantages to borrowing from the ones closest to you.
First, family and friends are likely to lend at low interest, while some even offer interest-free loans. Some may agree to longer and more flexible repayment terms. Plus, many family members and friends do not need you to submit a comprehensive business plan just like banks do.
But, of course, there are drawbacks to asking family and friends to finance your business. Banks and other lenders don't care whether you treat yourself to a premium steak or a glass of expensive wine in a fancy restaurant now and then as long as the debt is paid every month. Family and friends, on the other hand, will definitely have something to say about your spending habits after lending you money (especially when they see it on social media).
God forbid you'll miss a payment or two because you'll never hear the end of it. Moreover, missing payments or defaulting on your loan can potentially damage your relationship for the long term.
When borrowing from family and friends, make sure to consider the loan as a business transaction. Clarify the terms of the loan with your lender. To protect both parties and to minimize misunderstanding and acrimony, we recommend that you draw up a contract.
There you have it, the best financing options for starting an asphalt maintenance business or purchasing equipment and supplies. You can also visit Asphalt Kingdom’s Financing page to learn more about how we can help you get the equipment and supplies you need. Don’t forget to check out our blueprint for starting a business course and other resources here at Asphalt Kingdom to learn how to build and scale your business.