If the startup costs are high for your new business idea you may need a load to get things off the ground.

According to the Small Business Administration, one-third of new businesses fail within the first two years, and less than fifty percent of them last four years or more. For the vast majority of these businesses, the reason for their collapse is financial. Therefore, the best way to ensure that your business doesn’t become a statistic is to get a startup business loan.

Where to get a business startup loan

There are many different sources of startup business loans. These include:

•Banks and credit unions

If using a bank, it is best to start with one that you already have a relationship with. Credit unions can also be a great source of funding because they are smaller than banks; as a result, you are more likely to be able to speak directly with those who will be making the final decision about your loan.

•Business lenders

Business lenders are not banks and therefore are not restricted by as much regulation. Many of them specialize in loans for startup businesses and are thus much more likely to approve your loan. Others focus on SBA loans, which are specifically tailored to small businesses.

•Peer to peer lending

Peer to peer lending means getting a loan from a person rather than a lending institution. This type of loan is often less expensive than other types because it gets rid of the bank and allows people to compete for your business.

•The Small Business Administration

The SBA is not a lender in and of itself, but it has three different loan programs that can benefit small businesses. It is important to realize, however, that you must be denied for a regular loan before you can apply for an SBA loan.

What you will need to get approved for a startup business loan

The key to getting approved for a small business loan is providing plenty of documentation. The following are some things that you should prepare before applying for your loan.

•Credit history

Almost any lender is going to want to know what your credit is like before they loan you any money. If your credit is poor, you may end up paying a higher interest rate or being unable to get the loan at all.

•Business plan

The more detail you provide about your business, the more apt your loan is to be approved. Your business plan should include financial statements, your business strategy, your background and your reasons for applying for the loan.

•Cost breakdown

If a lending institution knows exactly where its money will be going, it is much more likely to grant you a loan. Calculate as exactly as possible what percentage of your loan will be going towards equipment, inventory, personnel and building rental and include this in your business plan.

•Market analysis

Many people neglect to include this in their loan application, but if lenders know you understand your market they will have greater confidence in your ability to succeed as a business. Your analysis should include not only information about the industry and your possible customer base, but a statement about how much of the market you expect to capture.

What to expect from the Lender

Most business lenders will require some type of collateral on your loan. If you default on the loan, the bank will take this in exchange. They may also require a down payment, equity in your business and/or a personal guarantee. There are lending institutions which require none of these, but you can generally expect to pay a higher interest rate for a loan from them.