Sometimes all it takes is an idea to apply for a commercial loan. All first timers approach banks, the safest and understandably the only financial institutions to raise funds. This was the only way out for the previous generation of commercial loan hunters. Today the options have improved as venture companies have emerged as viable alternatives. The approach road to making dreams come true s more open.
If the business plan is ready, then welcome to the world of commercial loans, where a good deal can be made great with a stable venture partner. There are chances that if the bank is approached directly the answer may be no. Banks now reject funding due to many reasons. Repayment of loans and bad debts, no collateral, first time entrepreneur risk, difficulty in accepting terms and conditions imposed … the list is endless. The dream run can continue to steamroll, with the borrower approaching a funding VC.
The working capital is the stepping stone to success and the journey begins with real expectations and not idealistic plans. Not every business sounds 'safe' enough even though it is unique for the owner. The idea may work or not work. To reduce the risks ask an alternate VC for the commercial loan. Go easy on the infrastructure and needs. Start only with the basic requirements to gain confidence of the VC. Seek professional help in getting the funding process.
A financial head is likely to come with more options to get the business rolling rather than look for bigger companies to fund the huge loan. The current lending environment is not conducive to new outrageous ideas. Funding only the potential clients who will bring the returns is possible. If you are expecting to break even only after two years, and will not pay back soon soon the commercial loan is likely to be returned. Rework the modalities with the loan experts and get the best offer.
Hiring a professional is the best way to ensure that each time the loan application meets an acceptance hurdle; the offer can be tweaked to suit the initial loan requirement. It is not easy to overcome the SBA commercial loan rules to get funding for the working capital. Things have backfired in the past for SBA finance companies. They are attributable to make advance unless there is clarity and assurance that the seed funding amount is returned with fees.