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Obtaining Small Business Loans

Obtaining small business loans is tricky unless you are well prepared. Whether you are applying for a loan from your local bank, credit union, or some other source, you need to do your homework first to ensure that your loan application is successful. Most banks and other creditors consider small business loans risky especially in the initial years of the business. So, you have to work doubly hard to convince them that your business idea will succeed, you have a good business plan, that you are willing to invest your time and money in the venture, and that the venture will have sufficient cash flow to service the loan.

When looking at small business financing, most bankers check if the entrepreneur has also invested in the venture. They expect you to bring in between 25 and 50 per cent of the money needed for the start-up. The banker sees no reason to risk their money unless you are willing to risk some of your cash by way of capital.

Another reason why many start ups are denied small business credit is the lack of a convincing business plan. Before you go to meet potential lenders, you need to firm up your business plan. You need to show the lender exactly what their money will be used for and how you plan to repay the loan.

If you are a merchant, you can apply for a merchant cash advance, where the money borrowed can be used at your discretion. However, you do need to show regular sales and the potential to increase sales after the borrowings.

When in need of small business loans try approaching the Small Business Administration for help first. If they are willing to underwrite your loan amount, banks and other small business lending institutions will be more willing to lend to you. This is because their risk is lower. You can even try negotiating for a lower rate of interest.

When you need business credit line for operating expenses or to expand your business by purchasing more stock, it helps if you can offer the lender some collateral. If your business has tangible assets such as real estate or machinery, now is the time to use them to get credit at a lower rate of interest.

When applying for small business loans it is important to keep in mind that the primary concern of the lender is your ability to repay the loan. If you are able to convince potential lenders on this point by presenting a sound business plan and a repayment schedule you are more likely to obtain the loan. Yet another thing that bankers and lenders check is the personal credit rating of the borrowing entrepreneur. If you have not done so yet, get your credit rating reports and ensure that they reflect positively on your willingness to repay loans. By taking these very essential steps, it will be easy for any entrepreneur to obtain loans for their business needs.

Small Business Financing Resources For Restaurant Or Retail Business Owners

There are small business financing resources to help you start your business but if you don’t know where to go start here with these resources.

Government Small Business Loans – Visit or call your local business library or government agency. You can apply on a local, state, and federal level to get the money you need to commence and grow your business.

You could get a small micro loan, disaster relief loan to rebuild your business from a natural disaster or a simple short term lending loan. You might even be able to get a loan based on your geography!

Veteran Loans – For those who have served in the armed forces, you may be eligible for a veteran loan to use on your small business. Check with your local veteran’s chapter to apply and see if you qualify for a loan and how much you might be able to get to use on your business.

Small Business Loans – The Small Business Administration is a nationwide operation. They are located in all states and offers small business loans and resources to those who qualify. The Small business administration deals through private financial institutions, to help you get low interest loans. In addition they have all types of resources you can tap into and you should. They have available online resources you can tap into to help you with your business, live training, free consulting, etccc You definitely have to go pay them a visit online or in person.

USDA – For those involved in produce and working the land for food purposes to be resold, in the agricultural industry, then you may qualify for a small business loan. Check out the USDA website to find all of the information you need about their small business loans and what information they need when you apply.

Women – Being a women in business or trying to start a business does not mean you have to do it alone, in fact women are responsible for a large percentage of small businesses that are in operation. There are many small business loans that cater to owners who are women. Some are offered through your state while others are offered through small business corporations, organizations and non-profits.

Minorities – For those whom are considered a minority, there are all types of programs to help you start your business. There are some small business loans provided to qualifying minority groups. The MBDA works with minority groups and evaluates their situation to determine if they can apply for a small business loan. They also offer many tips and resources to help you get started with your business venture.

Grants – The business library in your local area is an excellent area to start to tap into the grants available through the government, corporations, non-profits, and other organizations. This type of money is called free money to some. This is money that doesn’t have to be paid back, but with some grants, there are specific regulations on how the funds can be spent.

Research thoroughly all the various many small financing business financing resources available for almost any situation. Make sure you check out all of your options to see which resource will work best for your business needs.

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4 Practical Options For Financing Your Small Business

There are several challenges when it comes to establishing your own small business. Financing is a major aspect to consider when embarking on this journey. Figuring out where the money is going to come from will often turn out to be an extremely nerve-racking process.

It can be a a major obstacle that you must overcome and one that often prevents many individuals from establishing their own small business.

Bank loans are often the first initial step that people take when attempting to start their own small business. Financial institutions can be very demanding and require things like collateral and business plans before they will even consider lending you money for your business.

Lenders can make it seem virtually impossible for people who are attempting to start their own business. Often insisting the you use personal assets as collateral. The thought of putting your home or other assets up for collateral can be stressful as well as scary.

Banks may also require that the business owner actually lease their business space rather then purchasing it. They make these demands in some instances because they don’t want you to tie up their cash in assets that in the bank’s eyes will offer no short-term returns for them.

Lenders may even require that you use their funds for inventory, that can offer them some immediate returns in the event that your business fails. You must also understand that these types of loans come with interest charges and fees that will increase the amount of money that you must repay.

Applying for government grants is another option that you may want to consider when you are looking for funding to start your own business. In the United States as well as in other countries there are many programs that appeal to the needs of potential small business owners. When you begin searching for these types of opportunities, make sure that you check not only the federal government, but your state and local government agency’s as well. Applying for a grant can be very time consuming and isn’t always easy, but it is well worth your time and effort, because if your business receives a grant the money never has to be repaid.

Dipping into your own personal funds is yet another way to fund your small business and is one that most new business owners will inevitably use. This is usually used in conjunction with other funding methods, such as bank or personal loans. The big plus with this approach is that you won’t end up being confronted with high interest charges and conflicts that loans may demand.

One more option to think about is accepting private donations or seeking out investors. If you think you’ve got a great new idea for a small business or product, it is possible to market your idea to potential investors; these are usually known as venture capitalists. Unlike a traditional bank loan, this method often involves the investor having some form of stake in your business as well as receiving a percentage of your profits. To attract potential investors you new business idea has to be innovative as well as potentially profitable, because you literally have to convince the investors that you are going to make a profit and that they will too.

Generally a controlling interest in the business is given to an investor provides start up money for your business, which means you must be prepared to share control of your business with your investors to sum extent.

The bottom line is that there are several ways that you can finance your small business. Which ever method you decide to pursue it is important that you do your research, seek help when necessary and be prepared to face any obstacles that may get in your way.