D. Non-bank Loans
Because bank loans are often difficult for startups to get, other organizations have cropped up to meet this need. Examples of this type of lender include Kabbage.com and Accion.
| Advantages: | Disadvantages: |
| The business owner maintains ownership and control of the business. The borrowing relationship is formal with clear roles for all parties. Startups with short business histories, low credit, or little collateral can access these loans when traditional bank loans may not be available. | Non-bank loans may have higher interest rates and may require a personal guarantee from the business owner increasing personal risk. In other words if the business is unable to pay the debt, the owner will be responsible. Like other forms of loans, non-bank loans require a lot of paperwork and business owners with bad credit or no personal property may pay very high interest rates (up to 20%), or be ineligible. |