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Financing for a Small Business

There are many different ways that you can obtain financing for a small business. Most entrepreneurs initially go to a bank in order to receive the capital that they need in order to launch or expand a business. However, given the current credit market environment, many small business owners have had significant trouble as it relates to obtaining the money that they need from lending institutions. As such, one of the most popular alternatives to using a bank loan to start a business is to work with private investors. However, it is should be noted that these investors will require a significant amount of equity as it relates to providing capital to your business.

If you are a company that is already in operation then it may be in your best interest to first work with a lending institution as having a proven track record can ameliorate a vast majority of the risks associated with paying interest and principal back on a monthly basis. This is especially true if you have a significant amount of built up equity in your business. It should be noted that most banks and financial institutions are going to want to see a tremendous amount of tangible assets as it relates to your business. There is always going to be a need for collateral when you are working with a traditional financial institution.

When you are working with a private investor the most important issue to note is that your business must be economically viable. If your business does not or will not produce a profit that will sustain a 20% year on year return on investment then you may find that you are going to have significant trouble finding investors that are willing to put capital into your business. This is primarily due to the fact that the risks associated with small business investing is extremely high. As such, you should focus on how you intend to manage risk if you take capital from an angel investor or other type of private funding source.

The final methodology of financing a small business is to use your existing lines of credit. This may include credit cards and home equity loans that come with a low to moderate interest rate. Many of the best small businesses were started this way, and although the personal financial risk is high, this type of financing may come with far fewer expenses. We are going to continue to discuss creative ways that you can finance your business on an ongoing basis as it relates to getting capital for your new or ongoing venture.

Barracudas and Dandelions – Clipart and Small Business Finance

Business is like a barracuda-swift and silvery, sliding through the water and cutting past its prey. Business is also like a dandelion, quick to take root and swift to blow away; unless that dandelion grants a wish, it may vanish on the wind. But whether animal or vegetable, in the water or on the land, can business be-free? As in, can a business provide something for free? Well, free clipart is part of a broad history of online distribution services aimed to increase the public domain and enable the small businessperson. Even in our metaphors-barracudas, water, prey, dandelions, and wind-we have hit on just a small sampling of online clipart.

Free clipart isn’t just a business, though; free clipart is a gift to businesses, especially small businesses. Letterhead, checks, logos, signs, and websites all benefit from free clip art. Whereas extensive design work once had to go into even the most mediocre of media, free clipart has helped build up the reservoir of design opportunities, affording entrepreneurs yet another way to take hold of some stopgap measures. While you wait to grow into bigger advertising projects, clip art makes your fliers exactly what you need.

Quality is crucial, of course. Using just any free graphics to fill your clipart needs won’t always turn out for the best. When appropriate and successful finance is your aim, you can’t afford to load up with shady half-baked measures. Barracudas slide right on by and dandelions blow away unwished-on. For free clipart to be effective clipart, you need to be willing to take the time to go hunting. Most large clip art libraries are able to fit most bills when it comes to small business; however, free clipart does not come only in big chunks. Small free clipart libraries often carry unique images that can be taken and used as is or incorporated into something more to help facilitate effective finance in your small business. Of course, with all of this, you cannot discount the effect that paid clip art can have on your business. Sometimes you have to pay money to make money.

Ultimately, here is the way to think of how clipart affects you. The barracuda might be your venture-but let’s say the barracuda is the clipart. It cuts through the marketing fluff and weaves its way into the hearts of your advertising audience. The dandelion is your small business finance. If you aren’t careful with it-if you don’t want it enough-it blows away, never to be seen again. Free clipart fixes that. Think outside the box. Think creatively. Think free-and think freely; then, you will have the mindset you need to make something happen with your small business. Finance may not be free. It may be frustrating. But making your name can be made easier. Just look for the swift silvery flash, make a wish, and make it work.

How Small Businesses Can Get the Financing They Need

Small businesses need access to financing in order to improve the likelihood of a successful start-up and growth in their business. Any steps a business owner can make to increase their chances of obtaining financing are critical. The four steps a business owner can make to improve their position with lenders are:

Step 1 – Set up the company right away to start to establish age to the business. This can be accomplished by forming a LLC or corporation which will provide a date the business was established. In addition you want to file for a business license even if you don’t have a location for your business yet. Use your home address if you need to.

The key with Step 1 is to establish a start date for the business. Many lenders will issue credit to new businesses but they want to see that you’ve been established for at least six months.

Step 2 – Get in compliance with the lending market. Lenders have specific requirements for obtaining a small business loan. They also have a system for reviewing every application they receive. Some lenders don’t pull a credit report until they’ve taken a few steps to determine if the company is real. Why would they spend money pulling a credit report only to find out the business hasn’t even been formed yet or it doesn’t have a phone number.

A few lenders we’ve researched have calling directory assistance to look up the business name as the first set of tasks they will do before making any decisions on the loan application. If the business isn’t listed with directory assistance the lender will decline the application and move to the next one.

Make sure you are in compliance before applying for small business financing.

Step 3 – Create a presence for your business. Lenders will look up your company in various databases online to help decide if they will grant an approval or not. If a lender looks up a company in one of their databases and the company doesn’t show up they are likely to do more research on the business or may decline the application right away.

To create a presence you can register with the business credit bureaus and list your company with various online business directories to establish your company in these databases.

Step 4 – Start with the easiest type of credit to obtain – Trade Credit. Trade credit is the single largest source of lending in the world. Don’t ignore this type of credit and financing available to small business owners. By working with companies that issue trade credit you will establish some credit accounts in the business name only (no personal credit check or guarantee required). Just make sure the company reports your payment history to the business credit bureaus.

Once payment history is reported to the business credit bureaus you’ll start to establish a profile and score. When the score has been establish, and your personal credit is at a good level (650+) you can start to apply with lenders. If you have a personal credit score below 720, you need to look for SBA lenders issuing micro loans that will grant up to $25,000 to a business that’s been established for six months and has requirements down to 650 FICO scores. They are out there, so do the research to find them.

By following these four steps you’ll put your business in a better position to obtain financing then doing nothing.