Getting a loan for your small business
At some point in the business life cycle (usually sooner rather then later), most small businesses need a loan. For many small businesses securing a business loan can be one of the most difficult challenges that they face. This can lead to a great deal of frustration since most small businesses find that they are facing a constant shortage of funds, with an ever growing list of demands, for their small business. However, if you can secure business financing it can go a long way toward helping your small business grow and flourish. Here is some information that you need to know about getting a loan for your small business-
- Start with yourself-While you may be tempted to start looking at outside sources for small business financing, financial expert's stress that you should first look at your own personal finances. Do you have assets or a source for cash that you may have overlooked that can help you get your small business up and going? If you can avoid taking on additional debt financing, it can place your small business in a much healthier financial position. If you have to be willing to sacrifice in order to make your small business work.
- Look to family and friends-Don't overlook the possibility that your family and friends may be interested in helping you get your small business rolling. If you are able to borrow money from your family and friends, you may also benefit from their support and encouragement. You must be able to get over any hesitation that you have, and communicate your needs to your family and friends. Remember the worst they can say is no. However, financial experts stress that if family or friends do agree to loan you money, you should treat it in the most professional way possible. Be sure to have papers drawn up spelling out in detail, interest rates, repayment terms and anything else that can affect the loan. This way you are not jeopardizing a personal relationship, for the sake of your business dreams.
- Network, network and then network some more-Even if your first go round through your family and friends, does not produce anyone interested or able to give you a loan, they may know someone else who can. It is important to make sure that you ask everyone you talk to, if they know of someone who may be interested in helping you with business financing. You should also make sure that you carry business cards with you wherever you go, since you never know when you will run into a possible key contact.
- Make sure your financial house is in order-It is crucial to make sure that your credit and your own finances are absolutely stellar. Once you do convince someone that your small business is worth funding, they will be interested in knowing how well you manage your money. Be prepared to show them a credit report and financial records that indicate you a great money manager. If you are not in a position to do this, you need to reevaluate your financial position at this time.
- Seek out traditional lenders-After exhausting all other sources then you need to consider approaching traditional lenders for your small business financing. You should be prepared with your business plan, a great credit record and a clear idea of how much money you will need, and what you plan to spend it on. Make sure that you present yourself professionally at all times and remember that the lender will be looking closely at what kind of risk you will be.