Finding funding for your small business

Gaining funding for a small business is one of the hardest hurdles you will need to jump. Several lenders have tightened their funding regulations and they won't offer funding to just anyone. Other lenders require collateral or co-signers in order to get your loan. This article will provide you with a guide to finding funding for your small business.

First, look for ways to eliminate the additional costs of starting up a business. When you are first getting started, a lot of businesses include money for things like new desks and chairs from Office Depot or other stores. Instead of shopping for the newest, most expensive pieces of furniture look for some used furniture. Hit up garage sales or talk to business owners that are remodeling or closing their doors. This is a great way to find some decent furniture and it will eliminate excessive loans.

Another way to eliminate additional costs is to use your home office to get started. Saving money on rent for a few months during the initial start up phase of your small business will save you thousands of dollars on the loan. Once your business has grown larger, you can look for a new place to operate your business from. Here's a surprising number, over $260 Billion could be saved yearly if employers would allow their staff members to work from home.

Second, if you don't need a large loan to get started with your small business, look into alternative funding options. Google was actually started off a credit card and look how successful it is today. If you have some money set aside, consider using it to get your small business started. Many people turn to investors or friends and family members to provide them with money to get started. While this is a great way to find the money you need, using close contacts can often be a bad idea because it could backfire if you do not withhold your agreement or if they change the agreement.

Third, offer some type of collateral to secure the business loan. Usually lenders want a valuable piece of property like your home in exchange for a loan. If you are putting your home on the line to secure your business loan, you'd better make sure you don't borrow more money than you need. Defaulting on the loan means you could lose your home and you will completely ruin your personal credit rating.

Fourth, demonstrate credit worthiness. Most lenders want to give money to a person that is able to re-pay them in a timely manner. If you have an excellent credit score and a solid credit rating, your chances of getting approved for a small business loan will significantly increase. To help your chances of getting future loans, always make timely payments or try to pay the monthly bill before the due date, this reduces the total interest that is collected on your loan.

Fifth, have someone co-sign on the loan if the lender is unsure if they want to give you the money. The co-signer will guarantee the loan in the event that you are unable to make the payments or if you default on the loan. Always select a person that has a vested interest in your small business idea and make sure they are comfortable with the fact that the payments will be their responsibility if you default. The co-signer needs to have a good credit rating and solid credit history in order to actually boost your chances of getting the small business loan.

Since you are taking a big risk on your friendship with a co-signer, it is important to have a plan when your sales aren't as high so you can cover the cost of the loan.