With a good business plan, or with a small business that you want to expend, needlessly to say, you need some funds. Getting small business loan can be relatively easy or very challenging depending on various factors such as the length of time you have been into business, the amount of funds you need, the geographic location, the ability to provide collateral, your credit score, the viability of the business idea, whether you are looking for equity or debt financing.
Types of financing.
For a small business start-up, the types of financing available usually are limited. If you don't have another performing business, financing options are usually limited to the ability and willingness of family members and/or friends to make loan, or your credit scores and assets when dealing with banks and other lending institutions.
Small Business Administration (SBA) usually makes a few direct loans, but will only guarantee 85% of credit union or bank loans for entrepreneurs who need small business start-up money. This can be the best option because the loan directly applies to the new business. Getting SBA guarantee makes it easier for small business owners to get bank loan, but you have to pledge assets such as automobiles, bank accounts and home as collateral. If you are able to secure SBA guarantee, the interest rate and the repayment terms will be decent, and will help you to start your small business economically.
Credit unions can also be an excellent choice; they are small institutions and you can talk directly to the higher managers to plead your case.
Bank can also provide loans to small business, but you have to prove that you are worth the money. You need to prepare your document including the very important business plan, your credit history is also very important if you have are starting or you have not been operating for long period. Don’t forget the financial statements for the business because you will have to prove business's financial health; they will use to prove how much you are worth. It is also very important to prepare detailed projection of the income you are expecting from the business after the funding. Ensure your business plan is up-to-date.
What if you cannot get small business loans from such institutions?
If you can't secure loan from such institutions, you should not harbor hatred to yourself, this is often the case for most small business . You can source for small business lending from:
Your family and friends.
Small loans from credits cards.
Your retirement account such as 401(k) plan.