Best Business Loan
Preparedness is Key
The differentiation between business start up and personal loans is imperative to understand. The banks often perceive such business loans as riskier — or a chance they could lose money. Approval of your business loan is dependent upon how risky your particular business is; and this could leave you putting forth more effort to obtain the loan.
It’s a dismal, but true fact that within the first few years of operation, more than half of all start ups fail. This is why the bank associates risk with your request for a business start up loan. The intent here is not to be pessimistic, but rather to make sure you’re ready for the process.
You will need to have all required documents assembled so that you can show proof of worthiness. Especially if your company has not been operating very long, the bank will consider your personal credit history a chief element. You definitely want to have a copy of your credit report handy.
Proving your financial health is also high on the list; and you’ll need to show your net worth. A serious businessperson prepares pro-forma statements. The pro-forma offers a projection of your business’s future net worth.
A final item for your documentation is to make certain you can show a current business plan. Winning small business loan applicants are those who demonstrate planning and have all their t’s crossed and i’s dotted. You actually want to over-prepare with more strategy, advantage, leverage, partner, and track record information than the bank could possibly want to know. Are There Other Business Financing Options For Me?
Though it is highly recommended to carefully research each one, following is a concise listing of possible small business funding options:
Unsecured Business Loans — Those with impeccable credit are the only folks who may quality for this type of loan. The basis for issuing credit is exclusively dependent on the business owner’s credit history.
Business Lines of Credit — Here we have a method of accessing capital (not to exceed the preset credit limit) with the use of a revolving credit account.
Small Business Start Up Loans — With these loans, owners of small businesses can buy a franchise or existing company, bring their new products to the marketplace, or expand an idea.
Working Capital Business Loans — Existing businesses utilize this type of loan to purchase additional inventory, pay for advertising or equipment, and obtain other needed business items.
SBA Loans — Microlending institutions and community development organizations turn to the SBA (Small Business Administration) for assistance and to establish guidelines.
Merchant Cash Advance — MasterCard or Visa can be used to obtain an instantaneous lump sum of cash from this company. After the business owner is in receipt of their cash lump sum, and up until the advance is repaid in full, a specific percentage of all future credit transactions is reduced by the merchant.
The Internet is overflowing with great web sites geared toward loans for the small business. Prior to signing anything, however, you should double-check all wording and charges.
A Word of Caution: A great many non-banking resources demand a higher cost for a business start up loan. There’s also a chance that you will be charged a higher interest rate. In order to receive financial backing, the possibility exists that you might need to hand over some business equity. Just be absolutely certain that you study each detail and are fully knowledgeable before moving forward with an agreement.