Small Business Loans for Young Entrepreneurs

A small business loan is designed to help small businesses gain access to funds that will the business grow. The funding can be important to a small business because they can use it for the purchase of equipment, expand its workforce or enter new marketplace. Also, new entrepreneurs will also benefit greatly from small business loans.

What Banks and Lenders Look For

Banks and lending institutions tend to look at an applicant’s experience and years in business as part of their process in determining the creditworthiness of a borrower.  This process tends to preclude younger entrepreneurs who lack the necessary years in business or experience that may be required.  In these cases, the type of business or product that is being proposed or made by a young entrepreneur, and its potential value, may be the more important factors to consider when applying for a small business loan.

For an entrepreneur trying to get their business off the ground, it is best to find a lending institution that is flexible. The SBA has a few loan options for the business owner with little experience.

SBA and Junior Achievement

Government agencies, like the U.S. Small Business Administration (SBA) and Junior Achievement, may provide an avenue to find available loan sources.  The SBA acts as a loan guarantor for private lending institutions and makes loans available loans to businesses that may not otherwise have access to this source of funding. 

A Junior Achievement (JA) organization is set up to assist young people to learn about business and entrepreneurship. The organization promotes the development of ideals.  Through JA and SBA, a young entrepreneur may be able to link into lending sources that look for young entrepreneurs.

Chamber of Commerce

A local business chamber of commerce and economic development can also provide an outlet of finance for the business owner. There is also local government economic development offices that can help finance a small business loan.

When attempting to obtain a small business loan, a young entrepreneur should prepare a business plan, resume and financial forecasts as well as other documents required by each institution. The most important ingredient within the document should be the ability to demonstrate the business’ viability and potential. The more information that can be provided helps the small business make the case for a loan.