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Getting financing for your business

brokenpiggybank19151356.jpgMost small businesses start out the same; you have a great idea and maybe even a following of people who have bought your product.So you decide that you are going to start your own business.Congratulations!But wait, you don't have any money, at least not enough money to really get your business up and running.So now what?Well, you need financing and fortunately there are a number of ways that you can get the money that you need to start and run your business the right way.

The first places that you should look for financing are all going to be close to home.Start with your own savings and checking accounts.See how much money you already have and can allocate to your business.If you have relatives, friends or even clients who have encouraged you to start your business, turn to them for financial assistance.They may be willing to lend you money or even partner with you as an investor.There are several options to consider.Just be sure to keep all of your professional relationships in check, make sure that you organize your business so that you keep your personal assets separate from your business assets and that you have documentation dictating who owns what portion of the business.If you still need money for your business, it is time to get financing from a banking institution or larger investor.

The right financing process can be difficult, mostly because it takes a good deal of time to find the right lender.You have the option of working with a local bank, non-bank lender, or a national lender.To obtain a loan, you must find a lender that is interested in working with you and on your project.In order for the lender to determine whether or not they are interested in your business, you will need to present them with a business plan.The purpose of a business plan is to communicate the nature of your project and business with a potential lender.The business plan is the biggest preparation that you will need to make when applying for financing.The actual financing application process usually comes much later and is generally relatively simple since you will have already needed to get the go-ahead from the lender beforehand.

You will then need to wait to see if you qualify for the loan.Lenders consider a variety of factors when making a decision on a small business loan. Therefore, it is important not to automatically assume that you will be able to obtain a business loan. Understanding loan requirements from a lender's perspective can help you identify any areas where you may face challenges in obtaining a loan and could possibly prepare for ahead of time to improve your chances of getting your loan.Both your personal finances and your proposed business financials will be closely evaluated by the lender so that they can determine whether or not it is safe to lend you money.

For some businesses a Small Business Loan Programs (or SBA) is the right option.SBA small business loans are not direct loans meaning that an SBA loan is provided through financial institutions (i.e. bank or non-bank lender).So to obtain an SBA loan, you must first find a willing lender.For more information on SBA loan programs you can visit the SBA web site. You also have the option of applying for a small business grant as a way of getting financing for your business.Although grants are rare and usually reserved for non-profit organizations, it doesn't hurt to apply for one, especially if you think that you business could be classified as non-profit.

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