Loans and financing for small businesses

Starting a business often has hefty start-up costs, from licensing fees to equipment to day to day operating costs. Oftentimes, business owners will need to secure financing to start their own business, because the costs are too great to fund on their own, or because they don't want to use personal savings to start their business.

Before deciding which type of financing to go with, make sure you map out all of your expenses-you may find you can cover the costs yourself, or you may decide to finance your small business.

When it comes to loans and financing for small businesses, there are many options. Some of these include:

Small business loans
Many small business owners rely on business loans to help them fund their business. It is not always easy to secure a loan, however. The following are some things a lender will take into consideration:

• Business plan. Your lender will want to see your business plan. This is a map of the way you are going to run your business as well as projected costs and financing. A well-thought out, well-written business plan will show lenders you have taken all aspects of running a business into consideration.
• Collateral. A lender will also want to know what kind of collateral you can provide before lending you money. If you are applying for a short-term unsecured loan and your small business does not yet have anything to offer as collateral, collateral falls to the responsibility of the owners, in which case they may offer their homes, savings, or other things. Keep in mind that this is quite a risk to take, so make sure you are prepared to accept the ramifications should you be unable to pay back the loan.
• Credit history. Lenders will pay special attention to your credit history as well. This is similar to looking at the credit of someone who is applying for a home mortgage. Negatives or collections on your credit score may make it impossible for you to get a small business loan, so make sure your credit history is up to par before going through the application process.

Loans from family or friends
If you have friends, family members, or business partners who will help you raise the necessary money to start a business, consider approaching them. Keep close track of how much you owe and to whom, and set up payment dates and keep a running total of how much has been paid and how much is still owed, as you would with any other loan. It is important to keep legal records in the event those you borrowed money from take legal action against you (whether legitimate or not). Records will help protect you as well as your friends and family members.

Credit cards
If you are in a cash crunch, a credit card is another way to finance your business or keep it afloat during the beginning months or slow periods. It is important that you shop around, however. Many credit cards offer no interest financing for a period, so it wouldn't be unwise to make charges, then pay off the balance when you start making more money again. In addition, look for a card that offers other perks as well. Many cards will give you a percentage back on your balance, frequent flier miles, and other perks for using your card.

These are just a few options for loans and financing for your small business.

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