Microloans for Business

The economy is hard right now, but do not let it prevent you from fulfilling your dreams. If you're looking for a favor in starting your small business, a microloan can be that helping hand. This article throws light on what a microloan is, how to get it and benefit from it? A microloan is…

The economy is hard right now, but do not let it prevent you from fulfilling your dreams. If you're looking for a favor in starting your small business, a microloan can be that helping hand. This article throws light on what a microloan is, how to get it and benefit from it?

A microloan is a small amount credited to the poor or below poverty level people, usually to help them start their own business. Quite often, the people who are unable to qualify for a traditional small business loan and put up security avail these loans.

These programs started to attract people when organizations came up to help hopeful entrepreneurs in indigent countries. It grows exponentially among women entrepreneurs and encouraged peer to peer lending. Peer to peer lending literally means – Different organizations collecting money from interested donors, donation centers, families, friends and offer small-scale loans to the qualified contenders.

The best part of these plans is that it is very easy to qualify for these loans. However, there are a few things that you need to know before applying for this.

  • Small business loans differ in size. The minimum and maximum amount may vary according to the plan.
  • Interest rates for business loans and other loans may also differ. Here, it is important to check out the interest value before applying for it.
  • You can use the credited amount for running capital also. For eg to buy infrastructure, equipment, etc.
  • The time period of returning the business loan depends upon the size of the amount credited. However, the maximum returning term variations as per the plan.
  • Typically, there is some sort of collateral demanded provision of loans. While, this is not necessary in the case of small scale loans.

How to Apply:

If you are willing to apply for a microloan, the steps are easy enough. It does not ask for long documentation or other formalities. Simply, visit the small business organization online and look for small scale loans. From that page, you will find out the small scale business loans. They're listed by state. Contact your mediator and start with the application process.

When you believe in yourself and your business idea, no one can stop you in starting it, not even lack of monetary funds. All you need to do is apply for it and qualify. And yes, if you really believe in your idea do not waste any moment, these plans are to help the hopeful and capable entrepreneurs only.

Top Financing Options for A Start Up Business

Business needs financial support as well as planning. If a business gets proper planning along with appropriate financial support to implement the plans in real life then there will be a great chance that the business will get the success. Businessmen know that it's hard to arrange financial support for a business. There are many…

Business needs financial support as well as planning. If a business gets proper planning along with appropriate financial support to implement the plans in real life then there will be a great chance that the business will get the success. Businessmen know that it's hard to arrange financial support for a business. There are many reasons for that, people do not want to believe in a business which is just placing its first step in the market. But still there are many ways and by using them, a business can collect financial support.

Small Business Start-up Loans
Small business start up loans are the great options for start up trade owners. It offers a great opportunity for those who are seeking financial support for their small trade. Basically, a wide range of small business loan startup loans are available in the market but among them, SBA loans are the most famous option. A businessman can use the SBA fund for various purposes such as inventory purchase, rent a business place or pay to the employees. So, you can easily use them for many sectors in your business.

Getting commercial loans are nowdays not a hard task if you have all necessary things. You can easily get an SBA lender in your locality. During this, nowdays many online lending institutions are available and you can contact them through the internet.

Credit Cards
If you are not getting commercial loans then you can turn yourself into a credit card. This process is not uncommon for startups. Many traditional lending institutions such as banks offer credit card designed specifically for small business which is far better than a personal credit card. A debtor should keep in mind that using a credit card loan is very expensive based on the rate of interest but if you are out of options and you need fund then it is also a great option for you. But before accepting the credit card loan make it sure that you have learned all the terms and conditions and then you should sign on it.

Family and Friends
The very first rule of a business does not mix business with pleasure. If you have the option to debit money from a family member or a dear friend then why you will search outside investor. The benefit to family and friends is that you do not need to search for commercial loans. Having commitments from friends and family also can help you establish credibility when you're looking outside investors. If your nearest and dearest do not believe in your idea, why should other investors? Very often, friends and family is a good source of funding. Beside all of this, if you have decided to collect your required fund from a group the make it sure that everything is written.

Saving
Your own savings can help you to come out from business financial needs. This option offers you freedom and control in the business. But it is also important to understand that you are giving your backbone to your business. It is also a very challenging work to determine what percentage of your personal savings to use. You may want to keep part of your savings account reserved to help you cover the first several months of expenses should reimburse not pour in immediately. You need to understand that this option is a very challenging option because you are investing your financial support to your business. It is advisable to review your options with an expert before proceeding.

Private Equity Stocks

Using the words Venture Capital and Private Equity are usually used together, however there is only one category of private equity, and that is venture capital. Private Equity has different risks. For example, some companies will go through growth changes overtime and this usually requires capital in different different amounts. This capital is also coming…

Using the words Venture Capital and Private Equity are usually used together, however there is only one category of private equity, and that is venture capital. Private Equity has different risks. For example, some companies will go through growth changes overtime and this usually requires capital in different different amounts. This capital is also coming from multiple sources. Each stage during a company's growth is looked at as a “risk continuum”. If your company is young and is barely generating a cash flow, then it will become a high risk to fund. Typically a company in this situation would be required to obtain capital from family or friends or angel investors. Once the company starts generating revenue, then the risk becomes much less.

Venture Capital is usually for established products or services that are looking to get out into the market. Various investors are always seeking for the newest and greatest product that consumers will absolutely love. Some of the major computer companies have used venture capital to fund their operation. This type of funding is looked at as a private partnership. Venture Capitalists will provide the equity financing that is needed in exchange for a stake. They usually will play a day to day role for guidance in order for the investment to take off within a few years. Most of venture investments do not make it far but for the ones that do, they can bring a huge return making their overall investment back and then some.

There are other private equity options such as LBOs and Mezzanines. These are often used once the company has grown some and is a little more secured. They may require some debt and equity however the overall risk is much lower with a low fail rate.

LBO stands for Leveraged Bayouts. They are one of the most common loans that are used for private equity. A company obtains a loan from a private equity firm which is then secured by cash or company assets. Sometimes the LBO is sold in several pieces and any cash that is generated would be used as a down payment for high leverages. This type of process was very big a couple decades ago though now LBO deals are more focused on purchasing businesses with the intent to add value to the companies assets rather than having the company sell pieces of their structure.

Mezzanines Financing is just a private loan. This type of loan either comes from a commercial bank or a venture capital firm that specializes in Mezzanines. They usually include subordinated loans or common stocks. When you do not take on a full equity position, then a firm that specializes in mezzanine debt can decrease its risk. This is based on capital preservation.

In order to engage in a private equity or venture capital partnership, the investor should be accredited. Sometimes even the net worth must exceed a million dollars. For investors who's net worth is a little lower, then they have the option for exchange trade funds. Exchange Traded Funds are a Private Equity Index. There is a list of numerous publicly traded companies that will invest into private equity.

Overall private equity has several forms and venture capital is just one of those that can assist a company during different growth stages. It's all based on how the market is turning and the existing cycles.

Where to Find an SBA Loan Easily

Searching financing for a small trade may need some persistence, but find out some genuine information on local small business loans have never been easier. Today's business owners can use the internet to select and locate the best financing for their situation, starting with government-supported small trade programs administrated at the state as well as…

Searching financing for a small trade may need some persistence, but find out some genuine information on local small business loans have never been easier. Today's business owners can use the internet to select and locate the best financing for their situation, starting with government-supported small trade programs administrated at the state as well as local level. Here are the major places from where you can start your search.

One of the first steps to finding out small business loans in your locality is to mark those lenders who are approved by the local Small Business Administration or SBA. This starting process will help you to identify the banks and private lenders who work with small businesses because all banks and lenders not do. This SBA approved lenders offer financing that is backed by the federal government through various programs. Besides that, you can visit SBA's official website to find out the approved lenders or banks.

Business USA's Access Financing Wizard business loans and financing options based on your ZIP code, business purpose, ownership and industry details. There are also check boxes to determine eligibility for specialty local small business loans, such as those for women- or minority-owned businesses.

Hundreds of locations are available across the USA and its territories where you will get your local Small Business Development Center which is one of the most valuable resource options. A good partnership between state economic development organization and local universities, with partial funding from the SBA, local SBDC's provide information on every aspect of running a small business, including access to local small business loans. You can find your closest office through the SBA's local assistance page, which lists all offices by state and territory.

SBA financing is not the only game in town when it comes to local small trade loans. Your local bank or credit union may offer financing that meets your requirements. You should give them a call because they are familiar with how you control your personal finances if you have an account there. Also, they are familiar with any state, municipal and regional loans or grants. Besides this, do not forget to contact your city business development groups and your local chamber of commerce. They may have some additional information regarding small business loans. Also, it is advisable to make a conversation with a trusted financial advisor before making any decision.

The internet is the best option for information. So, also can use the Internet to collect some information regarding your loan needs. Research about the top rated lenders in your locality and collect their contact information. If you do not find any good rated local lending organization then spread your research area. Contact them over the phone and arrange a meeting with them. They can offer you the most useful information regarding your required loan. Also, they can inform you that you are eligible for that loan program or not.

10 Additions For Improving An Apartment Building’s Value

Apartment buildings can be a major investment property, so they should be renovated periodically. Every well-planned renovation scheme can boost the establishment's ROI. In this post, we're giving you the ultimate dope on how to improve an apartment building's value. Sub-meter utilities We've seen countless apartment buildings where tenants recklessly use utilities, such as gas,…

Apartment buildings can be a major investment property, so they should be renovated periodically. Every well-planned renovation scheme can boost the establishment's ROI. In this post, we're giving you the ultimate dope on how to improve an apartment building's value.

Sub-meter utilities

We've seen countless apartment buildings where tenants recklessly use utilities, such as gas, water, and electricity. After vetting a couple reports, we've noticed one citing complaint from owners saying that tenants not pay heed to constantly running toilets if they are not paying for water. Which is why, every investment property, especially an apartment building, should introduce sub-metering-one of the largest value-add activities. According to this value-add activity, tenants pay for a utility.

Dryers and washers

One of the most in-demand amenities that come with almost every rental apartment building, these days, is a washer-and-dryer system. So if a property owner is planning to add this specific amenity, the person should charge anywhere between $ 40 and $ 75 monthly.

LED lighting

If you happen to be a long-term buy-and-hold investor, then equipping a rental space with LED lighting is a complete no-brainier. That's because LED lighting system eats little to no energy. Additionally, such a bulb even lasts for nearly 25 years-that is, you're saving a lot of maintenance charges as well.

Vending machines

The income generated from a vending machine that's standing inside a rental apartment can improve the property's value. If you're thinking of a couple places inside your apartment building where a vending machine can be put, then here's our advice.

  • Use common areas, such as parking area, gym, or pool, to place a snack-and-drink vending machine.
  • You can even use a couple other less frequented common areas, such as laundry rooms.

If property owners place a vending machine, they'll receive a percentage of the income from the vending machine owners / companies.

Garage parking

Tenants can easily pay more if an owner starts charging for the additional storage space that serves as an ad hoc parking spot for them. By charging additionally for a garage area, property owners can make more money easily and quickly.

Prime parking

Always reserve prime parking spots in an apartment building's garage for those who're willing to pay a prime price. The front and center spots inside a garage come under prime parking spaces, so you can charge for them accordingly. Tenants generally prefer these special parking spots, so landlords can even put a symbol saying “Premium Parking Spots for Rent” to lure more renters.

Renovations

This is pretty conventional, and many property owners trust this as a great way to add value to their apartment buildings. The renovations can encompass exterior, common areas, and interiors for increasing demands.

Trash pick-up solutions

If an investment property has a full-time maintenance guy, then the person can be used for picking up trashes too. Every resident hates to carry heavy trash bags to nearby dumpsters. That's why renters usually look for someone who can haul such heavy, smelly trash bags-here comes a maintenance guy for their rescue. Property owners just need to find a person who's willing to carry others' dirty bags. Typically, such a person charges close to $ 20 per resident for one month, and many tenants (renters) love this option.

Pet rents

If your tenants have pets and you are not charging, then you're absolutely missing out on a lot of additional income. In some areas, pet rents move as high as $ 100 per month.

Other service kickbacks

Some big-sized apartment building owners sign a contract with a cable or Internet service provider for supplying its services throughout the complex. For this task, the owners receive a small portion as a kickback whenever residents sign up for any of such particular services.

Because of these factors, it's necessary for landlords to implement each of the tips to boost their apartment building's value. Many of such great, workable tips can be accessed from the repository of every leading commercial mortgage lender.

How A Business Loan Helps Business People

Overview: Becoming a self-employed businessman is a great reputation in the society but the problems faced by the entrepreneurs from the day one of their business is overwhelming. It is a great challenge for a person to overcome all obstacles to become a successful businessman. The numerous problem faced by all is finance. Even great…

Overview:
Becoming a self-employed businessman is a great reputation in the society but the problems faced by the entrepreneurs from the day one of their business is overwhelming. It is a great challenge for a person to overcome all obstacles to become a successful businessman. The numerous problem faced by all is finance. Even great entrepreneurs of various industries have struggled a lot of financial crisis for setting up their business and to run their daily business operations. Thus finance plays a major role in the life of business people. Great ideas require the necessary financial support to bloom into a successful business.

Introduction:
There are various sources for business people to raise capital for their business. The most trusted source is from banks. There are various reasons why people choose banks as the best source for raising capital for their business. Banks provide a lower cost of funds in the form of Business Loans. There are various types of business loans at differential interest rates to facilitate business people to solve their financial crises.

Types of Business Loans:
Businesses are of different types and need finance at different stages of their business operations. The need also being different, banks help them in providing different types of business loans helping various small and medium enterprises to raise capital.

New Project Loan – Banks are interested in funding for new businesses and also for new projects of existing business. There are various criteria for getting new project loan and differs from bank to bank. Project loans are approved against the collateral of the person like residential property, commercial property or empty land.

Top-up on Existing Loans – These loans are issued for expansion, replacement, diversification of an existing business. These loans are approved for short term or long term basis to buy goods, machinery or any fixed assets for the company.

Working Capital Loans- Thesese loans are provided for the business to resolve sudden financial crises and repaid within short durations. Banks are more interested in providing working capital loans against their inventories, stocks or receivable bills of the company.

Secured Business Loan – Business loans in which companies raise their capital against any security for the bank. It may include plot, residential or commercial places, gold, shares, bills, insurance as collateral to get funds for their business. The interest rate is preferably less.

Unsecured Business Loan – Every businessman can not afford to pledge a security in getting the business loan, so bankers help them with loans without any security based on bank transactions and income tax returns. These loans are charged with more interest rates when compared to secured business loans.

Requirements of the Banks:
There are various steps and procedures followed by banks to provide funds. The procedure and documents to be submitted to the banks as follows

Identity and address proof of the company – Address proof and identity proof of partnership or proprietor business.

Statutory legal registration of the company – Whether the company is legally registered under government norms and have followed all procedures legally in setting business.

Financial statement of the company – Every bank is interested in seeing the recent 1-year business transaction of the company.

Income tax returns – ITR helps the bankers to check the business performance, efficiency level, assets and liabilities of the company and also tax that company pays from their current earnings. This also plays a major role in determining the loan amount for the business people.

Financial Security – It includes the fixed and movable assets of the company which helps the banker to consider providing business loans based on the asset value along with the business transactions. This also safeguards banks from the failure of businessmen that fail to repay the loan amount.

Previous Loan track – This is a very important factor considered by banks which will help them evaluate the financial condition of the business and also to check on past repayments on loans.

Litigation – It will help banks assess the character of businessmen before providing a business loan.

Takeaway:
Although business loans are found to be a great source for raising capital, business people undergo challenge in getting timely funds from the banks. In order to help them in availing timely loans, even NBFC is also now prepared to help them with funds at various stages of their business. Banks & NBFC have also made the lending process easy, with all verification done in shorter time-span, doorstep assistance in collecting documents etc. Businesses with good cash flows & credit score can avail timely funds with much ease.

How to Get Development Finance

Introduction In recent years and following the financial crisis, development finance has become somewhat hard to come by. It used to be a case of simply going to your mortgage lender and procuring the finance you desired (provided your development was realistic of course!). However, these days mortgage and development lenders alike are asking a…

Introduction

In recent years and following the financial crisis, development finance has become somewhat hard to come by. It used to be a case of simply going to your mortgage lender and procuring the finance you desired (provided your development was realistic of course!). However, these days mortgage and development lenders alike are asking a lot more from borrowers in terms of background checks, experience & income requirements and are seen to be operating on a far more stringent box-tick approach. This lack of willingness to be flexible from the larger banking institutions has created a new breed of development lender who has the ability to act quickly and flexibly for their clients, which is where most developers now go for their financing needs.

What will I need to get development finance?

Depending on your requirements there are a number of different lenders to suit your needs. However, each of these lenders will have different requirements, which is why I have put together a brief list of requirements that most lenders will want. Of course, this varies often dependent on the size of your development but these are all sensitive things to have in place nonetheless.

Personal
Some experience in development and evidence of experience

Planning
A site with outline or detailed planning permission
Discharge of relevant planning conditions
Schedule of works
Schedule of costs
Structural Warranty Insurance (for instance Buildzone)
Developers all risk insurance

Funding

Most lenders will expect a minimum 30-40% deposit on the purchase of the site however will usually be able to fund 100% of the build costs

Where do I find lenders?

The problem you will find when looking online is a number of brokers the charge high fees, guised as principal lenders and comparison sites alike. Although they can offer sound advice and get you good deals with associated lenders, you are often better off going direct. Do your homework – find a few lenders that lend in the range you seek and get three proportional quotes. It's easy to be mislead by low initial rates however make sure you query what other fees that could be charged and exactly what happens if you say, you are late to repay by a month. Afterall – when was the last time you completed a development that went exactly as planned?

What are the risks?

As with any business opportunity there are inherent risks. When financing your development using a short-term lender there are a number of risks to be aware of. Firstly, you should make sure that you can rely on your lender to provide the drawdowns in a timely manner and that the conditions / requirements for these drawdowns are abundantly clear and well documented. Your solitor should do this job for you but it's always prudent to run through the documents to make sure you understand it too. Secondly you should make sure you are clear on all events of default and what the penalties for going into default are. It may be beneficial to the lender when you go into default because for instance they will earn more interest on a monthly basis when you are (it is often double the standard rate). Although this is a very cynical view I have first hand experience of lenders behaving in this manner so it's important to remember a lender is a lender, not your friend. Lastly, make sure your schedule of works or timetable leaves plenty of room for error. The reason that 75% of development facilities go into default is due to facility expire. This could be down to a number of things but more often than not it's a simple case of the developer being too optimistic with the amount of time it will take for a sale to go through.

Summary

Getting financing for a development can be challenging at the best of times but being prepared for every question a lender requests will put you in good stead. So, before you start going to various lenders to seek quotes have those key elements above to hand.

Negotiating Better Independent Sponsor Economics

When an independent sponsor is raising capital for a new acquisitions, economics and compensation packages often vary widely based on the background of the sponsor, the transaction dynamics and the capital providers involved. We'll explain some of the basic components of a typical compensation package, as well as describe six ways to improve your ability…

When an independent sponsor is raising capital for a new acquisitions, economics and compensation packages often vary widely based on the background of the sponsor, the transaction dynamics and the capital providers involved.

We'll explain some of the basic components of a typical compensation package, as well as describe six ways to improve your ability to credibly negotiate better independent sponsor economics.

1. Focus on acquiring businesses that fall in industries or situations where you have an extensive experience, relationships or a track record. Without there's a lengthy track record across multiple industries or types of situations, it can be difficult for a private equity firm or family office to get behind an independent sponsor with no experience in the industry of the business they're raising capital for. Negotiating better economics will be a lot easier if you can demonstrate why a capital partner should support you over someone else, or a management team directly.

2. Bring a veteran operating partner or executive with deep industry experience to the table. If you do not have a deep background in the industry of the target company, bringing in an industry executive who will either augment the company's leadership team or serve in a strategic operating partner capacity is a great way to add value to debt and equity capital partners.

3. Find a proprietary opportunity at an attractive valuation. Bringing an opportunity to a capital provider that's been broadly marked by a capable investment bank is usually a non-starter. In many cases the private equity firm or family office will have seen the opportunity directly. Otherwise there is some legitimate reason why the capital partner should back the independent sponsor directly, save yourself the time and look elsewhere. Focus on direct opportunities or situations that have not been widly auctioned to the free world.

4. Develop a thought growth and value creation strategy. There's nothing worse than fundless sponsor who throws a lot of deals against the wall, hoping one sticks. It wastes capital partners' time and damages the credibility of the independent sponsor. If you intend to discuss an opportunity with a debt or equity financing source, you should be able to articulate why you feel the acquisition is compelling and what specific strategies could be implemented to grow the business and create value.

5. Identify and potentially tee-up other complimentary add-on acquisitions. Under the right circumstances, making add-on acquisitions can be a great way to grow the size of a company, achieve scale and unlock value. For an independent sponsor, having a possible follow-on acquisition opportunity or two available can be a great way for capital partners to increase the value of the initial investment, and potentially, put out larger dollar amounts. Having other opportunities lined up may put you in a better position with capital partners when negotiating fundless sponsor economics .

6. Run a coordinated and systematic process to raise the capital. We see independent sponsors or executives frequently who partner with the first capital provider that agreements to do the deal. While this sometimes makes sense because of time constraints, it usually leads to the independent sponsor getting squeezed on economics, such as a paid interest, management fee or deal fee. Running a more formal process allows the independent sponsor to both: a) find the capital partner that is the best fit with the sponsor and the business and; b) determine what “market” economies are for that particular situation.

If you do not have time to run a coordinated capital raising process, or you do not have the breadth of relationships with debt and equity capital partners to know whether or not you're being offered market-based independent sponsor economics, reach out to an investment bank that focuses exclusively on independent sponsor financing.

In most cases, the private capital markets for fundless sponsor led transactions are extremely inefficient. Very often, there are multiple ways to structure a transaction and specific types of capital partners that make for more complimentary partnerships.

Let the Interest Rate Elephant Into the Room

The feelings some business owners have about interest rates, when financing equipment or anything for that matter can be equivalent to online dating or anything we engage in that we attribute to the measure of our self-worth – it runs that deep. Why do not we measure up? Are we good enough? Lots of old…

The feelings some business owners have about interest rates, when financing equipment or anything for that matter can be equivalent to online dating or anything we engage in that we attribute to the measure of our self-worth – it runs that deep. Why do not we measure up? Are we good enough? Lots of old drama can boil up when working through a business transaction where you have to finance equipment or borrow money.

The issue is lenders are in the business of assessing risk, evaluating it, breaking it down, measuring what you have done in the past and also projecting that into the near future. It normally involves very little or no emotion so that an objective analysis can be done with an impartial decision. Business owners can play the drama in their heads, know the struggles they have had to get to where they are now and wear a medal of valor for having survived all the challenges. But that is the type of drama that underwriters and analysts stay away from. Yes, it takes formidable courage and tenacity to start a business, expand a company division, create a new product line or invent a new market product and every single person that goes down that path desires a break but the reality is not everyone will make it . Failure can happen when the person simply stops trying due to the emotional fatigue or runs out of resources and capital or is pressured from the outside by family and spouses that come down on them to take a new course.

Therefore, not every finance application can be approved – every business owner and finance manager is aware of that. Your past performance and current business status will either garnish an approval or end with a decline; for a debt lender, the past personal struggles do not come into play. The feelings of “they do not understand my business …” will swirl in their heads but it will not change the fact that they have not met the required approval criteria.

Finance applications which are approved can have a wide range of terms and conditions and this is where the expectations come into play. Almost everyone feels that deserve the best; the best (lowest rate) and best terms. The ideal loan for a new business would be a 3% rate that they could payoff and terminate whenever convenient with no fees and no personal guarantee but this is a fantasy and does not exist. Loan rates are based on: dollar amount financed, the more money funded the lower interest rate you pay; your time in business, usually over 5 years is best; your gross sales and cash flow, not just for one quarter or one year but for several consecutive years to show consistency; credit history, D & B and FICO records with clear history without liens and defaults is vital and finally, the type of equipment you are financing, does it have a strong resale value in case of repossession. These factors all play a part in the approval process with some weighing in more than others depending on the lender.

The fact someone has been in business for 30 years and feels that they deserve the best rates possible is understandable but if during that time they have had marginal profits, high amount of debt and personal credit that shows a couple of defaults and a medical lien then the reality is they will not get the lowest rates possible because they will be viewed as a higher risk profile. For equipment finance, average current “A” credit rates now are in the 5-6% range and for “B” credits from 7-9% range and so forth going up with increased risk. Yes, a bank credit line can still loan at 3-4% as long as you are a strong “A” credit and have been in business for typically over 5 years and can meet all their criteria as well but if you use your credit line for equipment then if you run into an emergency and need capital, you may have depleted your available line and be out of luck. Managing how you finance equipment and borrow capital should be a less emotional process and more focused on the clear criteria which investors and lenders specify for an approval.

A Small Business Loan Is Easy to Get If You Are Doing the Important Things Right

When your business is in its starting phase, you need a loan to grow it. Yes, there are ways for you to start your business with very little capital, but even in the age of the internet you need loans for the growth and expansion of your business. Oftentimes, startup and small business owners are…

When your business is in its starting phase, you need a loan to grow it. Yes, there are ways for you to start your business with very little capital, but even in the age of the internet you need loans for the growth and expansion of your business. Oftentimes, startup and small business owners are scared of taking loans because they believe returning the same loan with interest on it will hinder their growth. The fact is a loan is not such a big liability if you have done your homework before getting it. Hastily getting a loan without researching the market and knowing your business' growth potential can be detrimental to the business.

Your Business Plan Matters Big Time

It does not matter how experienced your management team is when your business plan is weak. When you ask for a loan from lenders, they are trying to find reasons to forward you the desired loan. They want to be sure that the loan they forward is returned in time and according to the terms and conditions set at the time of loaning. Lenders will seldom gauge the potential of your business to return the loan based on what you speak. What they want to see is a solid business plan and that's why you need to have an impressive one. A strong business plan will consist of the following and some more.

  • The company description
  • Management role and experience
  • The product description
  • Strategy for marketing
  • Financial projections
  • An executive summary
  • Documented cash flow

Keep in mind that banks often look at the cash flow in the documented form, and their scrutiny is not limited to what your projections are for the future but more importantly how you have managed things in the past. They will look at your company's cash flow records for past couple of years to see if you should be given the loan you are asking for. So, keep your business plan in mind and make sure you have worked on every aspect of it to present something impressive to the investors.

Your Loan Options Are Many

Sometimes, you have a solid business plan and everything else is in place, but your understanding of loan options is not at its best. Many small business owners live with the impression that the only institution available to them for obtaining a loan is a bank. That's far from truth because there are dozens of other ways to obtain the loan or investment for your startups that's much easier to manage than a bank loan. Some of the options available to you include SBA loans from the government, invoice financing, business equipment financing loans, etc. If you are just a startup and none of those options seem viable to you, there is online fundraising.

Online fundraising has become quite a popular method of getting investments for your startup from individuals who trust in your idea and concept of the business. Using funding website you have access to hundreds of thousands of investors located all around the world that are willing to help if you can convince them with your business plan and the team that's behind your project. So, avoid making the mistake that many small business owners make when they think bank is the only place for them to get any money for their businesses.

Your Timing to Apply for a Loan Is Important

This is a huge mistake that small business owners often make and pay the price in the form of not being able to obtain the loan they want at the terms they want. See, you will always be told to have a strong business plan because that's the only way investors will trust you as an entrepreneur or businessperson. When you create your business plan, you are not just jotting down random numbers on a piece of paper. Your plan should give you an idea of ​​what your business' needs will be in the coming times. That's when it makes sense to apply for loans well in advance and not at the eleventh hour.

When you apply for a loan at the eleventh hour, you are seen as a business in trouble. Most investors will see your business as the sinking ship and they will never want to get on it. Obtaining a loan in these circumstances can become close to impossible. This is the reason why you should apply for a business loan in advance and not at exactly the moment you need it. You also have to keep in mind that loan approval process takes time too. If you need the cash on an urgent basis, every day that passes during the approval process will be causing more damage to your business.

The Right People Can Make the Difference

Delegating responsibilities to the right people is an art and skill that not many business owners have. Oftentimes, small business owners very much much on their own skills and are scared to trust any other person to do things for them. This can be a grave mistake because you can not be the jack and master of all the trades at the same time. For example, you might be great at crunching numbers and making accurate projections for the business but not very great at sales and pitching ideas. If you have to pitch your business idea, its marketability and scope to the investors, choose the person who can best present it. After your great business plan, you will fail to obtain a loan because of your nervousness and lack of confidence when it comes to acting like a clever salesperson.

You have to bear in mind that investors are not investing only in your business, they are also investing in you. It is very important for them to like your personality to invest in your project. Appearing unprepared or nervous in front of them will send an impression that you are not fit to lead the project, your decision making is faulty and that you can not create strong teams.

A Well-prepared Presentation Can Win Hearts

It does not matter who is giving the presentation when the content is boring and does not address the points that investors are most curious to know. First, get your numbers straight and bring them into the presentation at the right points. Be the investor in your mind and think of the questions you would ask if someone offered the same product / service to you. Have your accountant, advisor and business lawyer by your side when preparing the presentation. You do not want to give wrong figures during the presentation and fall for a bad deal at the end of it. The most important thing is to explain your business idea as clearly as possible. Many times the presentations are so all-over-the-place that investors can not make heads and tails of it. If they do not understand your business, they will never invest.

So, bear in mind that obtaining a loan is not that big of a challenge. Most of the times, it is just some small mistakes in the areas mentioned above that become the cause of lost opportunities to get the right loans for your business. Create a solid business plan , choose the right people to represent your business and use all the options that are available to you at the right time to grow your business at the pace you want.