Loan For Startup Business: 3 Best Startup Business Loans

Starting a business in Cambodia presents amazing possibilities, but it also presents certain difficulties. Getting the money required to launch their businesses from the ground up is one of the toughest challenges facing business owners. With an eye towards the several possibilities offered by Cambodian banks such as ABA Bank, Wing Bank, ACLEDA Bank, and others, this article seeks to uncover the loan application procedure for your new company. In this article, we’ll help you revise the type of loan for startup business, explain how to get funding, and introduce the best available funding for your startup by spending the minimum time on business funding.

The Importance of Small Business Loans for New Business in Cambodia

Loans for startup business are quite important in Cambodia in promoting innovation and economic development. Funding these new businesses, meanwhile, can be challenging. Many business owners find it difficult to locate the correct source of capital to back up their concepts. As a new company, they need more protection to survive before turning into a stable organization with loans for startup business. So, how do entrepreneurs grow their business off the ground? Apparently, a loan for a startup is the key to supporting them to build a reputation, hire new employees or acquire machinery.

Purpose of the Guide

This guide is designed to provide comprehensive information on loans available for startup businesses in Cambodia. Whether you are a new entrepreneur or looking to expand your existing business, this guide will help you navigate the options, understand the application process, and make informed decisions from the loans for startup business.

Type of Startup Business Loans

Entrepreneurs have access to different types of startup financing options to overcome their particular situation. From conventional bank loans and microloans to peer-to-peer lending program and government-sponsored projects, startups have a range of financing choices to support their development and expansion. Understanding more loan types from different business lenders allows you to get the best possible loan, depending on your financial goal. You can also book a good quality finance consulting service to answer all these questions for you.

Traditional Bank Loans

Five million people have loans from the banking system, amounting to 232,393,394 million riels, or about $57.6 billion, Credit Bureau Cambodia (CBC) says. One of the most common and popular ways to get a loan agreement is through conventional bank loans. To assist startups with both short-term and long-term financial needs, banks provide overdraft facilities, term loans, and lines of credit, among other lending products. In the banking industry, the terms of the loan are typically reasonable, with fair interest rates and flexible payback terms.

It’s a good choice to apply for a startup business loan with a bank, especially if you entrepreneurs don’t know the exact loan amount their company needs. It is because a business line of credit allows you to borrow up to a predetermined limit as needed.

In Cambodia, small business owners might obtain a $10,000 line of credit from a local bank. If the business needs $3,000 to purchase inventory, it can borrow that amount. Interest is paid only on the $3,000 borrowed, not on the entire $10,000 limit.

However, conventional bank loans also have more hidden strict eligibility criteria for the borrowers:

• Only lend to the established business.
• Build your business for at least two years to show stability.
• A comprehensive business plan and cash flow are needed to show the clear direction of the organization.
• Your historical performance will be reflected on your bank statements by showing your funds management ability.
• Some banks even require borrowers to take part in local small business development centers to ensure they have the right mindset when running their businesses.

Microloans and Peer-to-Peer Lending Platforms

If the business owner’s personal and business credit scores are poor, micro-loans and peer-to-peer lending platforms offer alternate funding sources. Startups and small companies probably do not qualify for a business startup loan from any bank institution, so they should find smaller loans with more flexible terms and limits made available by microfinance institutions (MFIs) and online lending platforms appealing.

Usually between a few hundred and a few thousand dollars, microloans are supposed to help businesses with temporary needs, including inventory purchases, marketing campaigns, or equipment upgrades with a loan for startup business. Businesses can get financing from a large pool of loan providers without depending on traditional financial middlemen by means of peer-to-peer lending platforms, which link borrowers directly with private investors, but this loan for startup business also takes a long time to complete the entire business loan application process. It is the best way to get a small business loan without collateral security.

To get a business loan that can help you solve your urgent needs, contact a trusted loan provider who can approve your loan as soon as the next business day, like Khmer Prosperity Loan. We promise our approval of the loan for startup business will be done within 24 hours.

Government Programs and Initiatives

The Ministry of Economy and Finance allocated $100 million to two state-owned banks to provide additional support to Small and Medium enterprises (SME) and the agriculture and agro-industry sectors. Apart from traditional bank loans and alternative financing systems, Cambodian entrepreneurs can benefit from many government-sponsored projects and initiatives aimed at helping small businesses and entrepreneurship, which only funds for business purposes. Small business grants, subsidies, loan guarantees, and other financial incentives given by government agencies and nonprofit organizations help businesses have the money they need to grow. Twenty-seven local startups and small and medium enterprises (SMEs) have received grant assistance from the government.

The Small and Medium Enterprise Bank of Cambodia (SME Bank), for example, assists startups and small firms by means of multiple credit initiatives covering working capital loans, equipment financing, and export financing. The Ministry of Economy and Finance (MEF) also operates programmes like the Credit Guarantee Scheme and the SMEs Development Fund in order to increase entrepreneurship and support economic growth by providing a loan for startup businesses.

Traditional Business Loan vs Business Credit Card

In the fancy financial world, there are still many other ways to get money to start your business if your imagination is strong enough with a loan for startup business. What can help build your business credit in the easiest way? The answer is definitely a business credit card because it has the lowest requirement. Before applying for a new business credit card, it’s important to understand the differences between traditional bank loans and credit cards.

Feature	Traditional Business Loan	Business Credit Card
Purpose	Large capital investments, expansion, long-term needs	Short-term expenses, daily operational costs
Repayment Terms	Fixed monthly payments over a set period	Flexible, minimum monthly payments
Interest Rates	Generally lower, fixed or variable	Generally higher, variable
Credit Limit	Based on collateral and business evaluation	Based on creditworthiness, usually lower than loans
Fees	Origination fees, prepayment penalties	Annual fees, late payment fees
Accessibility	Requires good financial history and collateral	More accessible with decent credit score
Usage Flexibility	Limited to specified business purposes	Can be used for various business expenses

3 Best Startup Business Loan and Business Finance

Several major banks in Cambodia offer loans for startup businesses. Here’s a closer look at the key players and what loan for startup business they have to offer:

ABA Bank

ABA Bank is one of the leading financial institutions in Cambodia, known for its comprehensive range of banking services, including loans for startup businesses. There’s a total of 4 loans for startup businesses in ABA Bank, which are small business loans, medium business loans, large business loans and business loan refinancing. Understanding the differences between each loan for a startup business can help you to find the right loan for your business accurately.

Feature	Small Business Loan	Medium Business Loan	Large Business Loan
Loan Amount	$5,000​ –​ $200,000	$200,000​ –​ $3,000,000​	USD​ 3​ million​ or​ more
Purpose	Capital​ Expenditure​ Financing​ (CAPEX​ Financing)Working​ Capital​ RequirementsOperational​ NeedInvestment​ and​ other​ business​ needs	Capital​ Expenditure​ Financing​ (CAPEX​ Financing)Working​ Capital​ RequirementsOperational​ NeedsTrade​ Financing​ NeedsProject/Contract​ FinancingInvestment​ and​ other​ business​ needs
Collateral Requirement	Real estate property (Soft or Strong title)or Store ownership Certificate under own name	Real​ estate​ properties​ with​ strong/soft​ Title​ DeedCash​ depositMotor​ vehicle,​ machinery​ and​ equipment,​ and​ other​ fixed​ and​ current​ assets​​Third​ party​ Guarantee,​ Corporate​ Guarantee,​ and/or​ bank​ guarantees​ from​ accredited​ banks​Other​ type​ of​ collateral,​ negotiable​ with​ the​ Bank.
Repayment Terms	Up to 10 years	Up​ to​ 10​ years​ for​ investments​ and​ 12​ months​ for​ working​ capital​ financing​	Longer terms, typically up to 10 years
Interest Rates	Negotiable

Wing Bank

Wing Bank is another prominent player in Cambodia’s financial sector, known for its innovative banking solutions and commitment to financial inclusion by providing a loan for startup business. Wing Bank also designs its business into three sizes: small, medium, and large, like ABA Bank, but there’s no clear information for each loan. So we suggest whoever is interested in the loan for startup business, visit their branch to check if you qualify for a business loan in Wing Bank or not when the conditions vary by the lender and loan size. Let’s see another two loans for the startup business with the detailed requirements in Wing Bank:

Wing Agent Loan

• Loan Amount: Up to $25,000
• Loan Term: Up to six months
• Eligibility​: Must be Wing Agents with good CBC record
• Loan Repayment: Automatic deduction from the Wing Bank account

Merchant Loan: It’s one of the common types of cash-advanced financing support that is widely used by Cambodians as a loan for startup business.

• Loan Amount: Up to $1,000
• Loan Term: Up to 3 months
• Eligibility​: Must be Wing Agents with good CBC record
• Requirement: Unlike home loan, there’s no collateral or guarantor required
• Loan Repayment: Automatic deduction from the Wing Bank account

ACLEDA Bank

ACLEDA Bank is one of Cambodia’s largest banks, with a strong focus on supporting small and medium-sized enterprises (SMEs) with loans for startup business.

Feature	Loan Size	Loan Period	Interest Rate	Purpose	Requirement
Small-Sized Enterprise Loan	KHR 10,000,000	12 – 36 months	11.50%	Increase capital	Own a legal businessHave ID card, family book, residence book, or other valid documents
Medium-Sized Enterprise and Corporate Loan	KHR 200,000,000	12 – 120 months	9%	Expanding your business, buying your premises, fund working capital	Own a legal businessCommit to pay back to ACLEDA BankHave own capital at least 20%
Overdraft	From KHR 20,000,000	Up to 12 months	General Customer: From 9.25%Partner: From 9.00%		Having document presenting your fixed assets, inventory card, or other effective documents as collateralOpening Current Account with ACLEDA Bank Plc
Revolving Credit Line	From KHR 40,000,000	Up to 24 months	9.25%	–	Good background and characterHave a potential business with good status and legal profitability
Financial Lease	Up to KHR 2,000,000,000	Minimum: 12 monthsMaximum:72 months (brand-new vehicle)60 months (second-hand vehicle)	11%	Use assets such as vehicle, machinery, or other equipment	Provide the last year of financial reportsProvide photos of business operations

Khmer Prosperity Loan

Instead of just looking for bank institutions, online SME loans have already become the hottest source of loan for startup business in Cambodia. There’s always no time in business due to the immediate action to start or grow a business by grabbing the instant golden opportunity. It’s important to know the trusted digital loan provider for future use. Khmer Prosperity Loan is one of the leading online providers in Cambodia. Let’s check out what benefits you will get if you apply for a loan for a startup business from us:

• Loan Amount: Up to $15,000
• Loan Period: Depends on your needs
• Interest Rate: As low as 6.99% per annum
• Processing Duration: Within 24 hours
• Guarantor: No guarantor is required in the loan application

Relationship Between Personal Credit Scores and Start-Up Loan

Getting a loan for startup business is usually a major first step in launching a new company. The personal credit score of the business owner is one of the main determinants of the possibility of getting a startup loan. Usually, personal credit scores and startup financing have a link as follows:

Creditworthiness Assessment

Loan providers see personal credit scores as the main factor in an applicant’s creditworthiness when assessing a loan for startup business. Loan providers mostly rely on the personal credit score of the business owner for startups, who sometimes lack a thorough background in business credit. Borrowers who can’t repay the loan may cause a big loss to loan providers, so reviewing your personal credit score is a must before approving a loan for startup business. A good personal credit score indicates good credit behavior, lowering the apparent risk to loan providers and raising the loan approval probability.

Loan Terms and Conditions

A good personal credit score will allow for more advantageous loan terms and conditions in a loan for startup business. With good personal credit scores, business owners take lower interest rates than home loans and longer loan durations. Conversely, a reduced personal credit score could result in shorter loan terms, smaller loan amounts, and higher interest rates, therefore reflecting the greater risk the loan provider feels to be present. Besides, with a good credit score, borrowers are most likely not to get loans from illegal money lenders, which means they can avoid any hidden cost loan charged by predatory loan providers effectively.

Building Business Credit

For startups, the personal credit score not only influences initial loan approval but also serves as a foundation for building the business’s credit profile. Timely repayment of the startup loan can help establish a positive business credit history, which is important for securing future loan for startup business on better terms.

Practical Steps to Improve Personal Credit Score

Entrepreneurs can take several steps to improve their personal credit score to qualify for a startup business loan:

1. Pay Bills on Time: Ensure all personal bills and existing loans are paid promptly.
2. Reduce Debt: Pay down existing debt to lower the credit utilization ratio.
3. Check Credit Reports: Regularly review credit reports for errors and dispute any inaccuracies.
4. Limit New Credit Inquiries: Avoid applying for multiple new credit accounts in a short period.

You can always start to build your credit profile with a cash loans or reliable personal loan lenders in Cambodia. In Khmer Prosperity Loan, we offer options more than personal loan like quick loan, online loan and car loan.

Ways to Get a Loan for Startup Business

A well-prepared loan application can increase your chances of approval. Here are some tips to help you get started:

Creating a Solid Business Plan

Your business plan is a crucial part of your loan application. It should clearly outline your business goals, strategies, and financial projections. Include detailed market research and explain how the loan for startup business will help your business succeed. Always ask yourself “why”, then you will have the mindset when creating a business plan for agriculture loan. 

Financial Statements and Projections

Prepare detailed financial statements, including balance sheets, income statements, and cash flow projections for your loan for startup business. These documents demonstrate your business’s financial health and help loan providers assess your ability to repay the loan. Use the free loan calculator on the Khmer Prosperity Loan website to check monthly installments by adjusting your desired loan amount and repayment period.

Improving Your Credit Score

Your credit score plays a significant role in the loan approval process. Take steps to improve your credit score by paying off debts, reducing credit card balances, and addressing any errors on your credit report.

Understanding Loan Provider Expectations

Each loan provider has different expectations and criteria for approving a loan for startup business. Research these requirements and tailor your application to meet them. This can include providing additional loan documentation or explaining how you plan to mitigate risks.

Conclusion

Securing a loan for a startup business in Cambodia can be a complex process, but with the right preparation and understanding of the available options, you can increase your chances of success. By carefully comparing loan products from different banks, preparing a solid application, and managing your loan effectively, you can obtain the funding you need to grow your business. If you need for a startup business loan application, visit the Khmer Prosperity Loan website and fill in the application form; our professional loan advisor will contact you within a working day.

Frequently Asked Questions (FAQs)