Financing Small Businesses the Right way
Some people have want to start a small business at some point in their lives for a lot of reasons, there is a lot of work involved but it’s well worth it in the end. Financing will be key in your endeavor to start your small business but the question you need to ask yourself is whether you know what kind of financing you need. There are very many reasons that you would need a loan it could be for capital, buying of inventory or getting equipment for your business. Both new and business owners who have been in the game for some time, getting a loan will mean going to a commercial bank. Banks provide you with the most ideal business loans that come with manageable interest rates.
The loans are okay but the approval process can be quire stressful for sure. If you do your research you will come to realize that small business loans have more strict measures in comparison if you were getting financing for your business through other means. The banker will need to see good credit scores from you, some assets that can be used to secure your loan with some lenders, some experience in business and finally they want you to show them that they will not be taking a risk with you when they give you their money.
When you are in the process of starting your small business chances are that you will not meet all the requirements of the banks such as experience in business built you don’t have to give up when they turn you down. There are many other places to get financing for your businesses when the bank option hits the rocks, sufficient in number actually. Try looking for an SBA loan which many would say the government offers but in real sense they are offered by the commercial banks only that the government offers to guarantee a percentage of them.
Consider factoring as a way to finance working capital, this works if you have a lot of money tied up in accounts receivable, you will trade the accounts for money . Factoring companies will buy the accounts at a discount and they pay you cash immediately the deal is struck. If a business is new, it might not have the money to buy new equipment needed to operate. In such a situation you are better of leasing the equipment that you need because you could cripple the business if you opted to buy outright. An equipment lease is an agreement where the lender will buy the equipment and lend it to you for the time you need it a specified rate.