Financing Your Small Business

Running a small business alone can be a difficult task because of the finance that needs to be taken care of. There is no business without finance and that is a fact. The easiest way to avoid wasting time is by selecting a franchise business. A franchise business already comes with a prepared business plan. The one down side to having a franchise is the upfront fee that is required in order to get started. Receiving the funding for a franchise is much easier that getting money for a startup cost for a new business no one knows a lot about. Loans are much easier to obtain from banks because it guarantees a payment back to the bank.

The first person that should be talked to about the new upcoming business is the bank. The bank will provide an estimate of how much money will be granted to the business and the payment options that are available. Depending on how long the owner of the business has been with the bank the amount of money that is granted may be higher than someone who is just starting off. Some banks may cover all the costs needed in order to start the business. Banks will become the most helpful and forgiving lenders if the money is not returned back in a timely fashion, where as other places may not be as forgiving. Financing a small business is a long term job and goal that many business owners do not achieve because of financing.

Banks are not as welcoming to small businesses as they are to franchises because there have been many occasions where owners have picked up and left the bank without paying what is owed. Banks do not appreciate losing out on thousands of dollars. Banks are more eager to finance franchises due to the down turn in the economy. The bank sees the franchise as a consistent income and a long-term stimulus. The more money the bank makes the more job opportunities will be available and there will be more room for expansion to keep their banks in business.

Franchises have established good records with banks in the past and banks become comfortable with the payment plans when it comes to receiving their money back. The banks aren't the only locations providing franchises with loans to help fund the business. The Small Business Administration will help fund franchises and increase capital. Keeping an eye on what will be spent during the course of the year is very important. If all expenses are monitored closely an estimate of how much money will be saved and spent elsewhere can be determined.Knowing what is needed within the business is very important because buying the wrong thing can cause the owner a lot of money. A business can go bankrupt if the money is not spent wisely. Making large purchases should be avoided until the business can afford to do so. 85% of startup businesses fail in the first five years because the financial planning is not set up before the business has started.

Receiving financing is the best way to keep the business running. If the financing is not received from the bank the business does not have to worry about being in debt or paying loans back in a timely fashion. Having total financing available means that nothing will have to be paid back until the business has made enough money to keep running, basically it is out of courtesy. Each financing object depends on what the owner will be able to do financially. If they are able to pay back loans the bank is the best way to go and if not receiving funding from elsewhere is the better option.