Working for yourself can be a great thing. You can finally get a
chance to chase down that long-term dream. But the finances of
kick-starting and maintaining a small business can be tricky at best and
a quagmire at worst. So, if you’re looking at getting a small business
loan, what are some tips that might improve your chances? This article
is drawn from the stellar work on Yahoo! Personal Finance.
Day Job
I run a small business, and in order to do so, I work three days a week
in a different field. For people in the creative industries, that’s our
reality. And that’s not necessarily a bad thing. Lenders are looking to
see alternate forms of repayment- after all, 80% of small businesses
will fail within the first couple of years. They’re more likely to look
favourably upon you if you have other means of paying back the loan,
should business become a bit slow. It might take you a couple of years
longer to get your small business up and steaming, but slow and steady
can win the race when it comes to setting up your big dream.
Value It
To get a small business loan, chances are you’ll have to have a source
of collateral before you get your hands on some moula.The expert quoted
in Yahoo! Personal Finance suggests that collateral is especially
necessary for those applying for working capital, inventory or
equipment. It’s important to put things on the line when starting up a
small business, but ensure that you haven’t exposed yourself. If the
business fails, you don’t want to be in an untenable position.
Keep Your Records
Although websites promise an instant loan approval with one click, it’s
not a reality for small business loans. Expect to be asked a million and
one questions, and to have to provide documentation to support it.
You’ll also probably be asked to share personal financial records and
your recent tax statements.
Map It Out
Waltzing in, asking for a big amount of money, and expecting a resolute
yes in response is living in la-la-land. If you’re at the point of
looking for capital, then you should be well past the point where you
have a thorough business plan. How will the business run? Who will run
it? What are their qualifications to do so? What are your contingency
plans and goals? You will be relying upon it in your business anyway,
let alone your application.
Character Reference
It always matters how you come across, and anyone who tells you
different is lying. If you are not confident or articulate in
interviews, it doesn’t mean you’re out. Your history speaks for itself;
ask former and current employers to write references. Pull together your
educational history and business experience. If you’ve taken the long
road- taken a couple of years out, had some setbacks- explain how you
overcame them. Lenders are interested in people who have a proven record
in achieving their goals.
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