Potential small business owners, like you, may already have great business ideas waiting to be carried out, but the only concern is how to finance the start-up business. Securing financing is perceived by many to be the most challenging part of any small business. Surely, it is not easy to secure loan grants for small businesses because banks and other lending institutions are likely to turn down loan applications. The reason? High levels of risk. However, don’t let this reality put you down. As long as you make ample preparations for loan applications, you are likely able to convince these lending institutions that your business is worth financing. We take on some helpful tips from business experts about what you can do to get your financing needs.
Tips To Get Financing Support for Your Startup Business
1. Determine what you really need. An important step to financing is for you to know what your business’ needs are. Do you really need financial support in the first place?
Angela Atkinson, in her article “How to Start a Small Business: Financing Your Small Business” says that you need to “Evaluate your overall situation to determine how much money you’ll need to get your business started and sustain it until it becomes profitable. The U.S. Small Business Administration (SBA) offers a comprehensive list of questions that you can ask yourself about your business to determine your financing needs.”
Quoting Richard Shoaf, a business consultant and entrepreneur, Atkinson writes:
“In some cases, you might not need a lender. He said it’s important that you don’t overextend yourself.”
2. Do some research for your options. There are a number of financing and loan programs available. The Small Business Administration, such as, has a comprehensive loan package designed to meet particular needs of small businesses. It is important that you are not afraid to ask questions.
As cited by Atkinson, Shoaf shares that “The State of Missouri, along with some banks, have programs for small businesses outside of SBA for as little as five percent,” Shoaf said. “This is a great opportunity for those looking to expand existing business or get off the ground.”
Chris Coleman, owner of St. Louis-based business FranNet (a company designed to help would-be business owners choose and develop franchise businesses) also advises to surround yourself with professional advisors. “There are free or relatively inexpensive courses locally that cover your financing options in today’s lending environment,” Coleman said. “Find a lending institution that has a solid track record on small business lending.”
3. Prepare for your meeting with the lender. Ensure that you have all the necessary documents to support your request for funding. Copies of your tax returns for the past three years and cash flow projections should be included.
Atkinson directs, “You can get a comprehensive Business Loan Application Checklist on the SBA’s website, but also be sure to check your lender’s requirements.”
The tips provided above should serve only as a guide to how you can secure financing for your small business. Check with the proper institutions and the SBA for more details on loan packages.