Where to look
I want to start my own business. What kind of small business loans are available to me, and how do I apply?
Disclaimer of responsibility
Starting a new business is never easy, and, unless you are wealthy, you will need some money before you start trading. If you are not fortunate enough to borrow from family members or friends to start your business, you will need to borrow money from a bank or another lender.
You can finance your business only by using your personal credit card, at least to some degree. Credit cards, personal loans, and home equity lines of credit are all different ways to start a new business. However, depending on your credit history, personal income, and assets, the chances of obtaining a personal credit are limited.
The other option to finance starting a business is to look for a commercial loan, or loan for a business, which differs greatly from a personal loan. Loans for short-term businesses, which typically have to be paid within a year, are a common source of start-up funds as you begin to have your business established, or when you need a cash flow relatively quickly. You can also apply for medium-term loans, which usually extend from one to three years, and long-term loans, which are reserved for major capital investments and improvements. A long-term loan, unlike short-term loans, should generally be covered through monthly or quarterly partial payments. Finally, you can also request a line of credit, which gives you the freedom to borrow only when you need it, up to a certain limit, without having to reapply for a loan.
When you apply for a business credit, you must provide the bank or lender with more information than you would have to give if you simply requested a personal loan. In particular, you need to take some time to develop a very specific business plan that shows the reason why you need the loan, how much money you will need, how much time you will need to repay it, and how you will pay it back. In your plan, you should describe your business, how you see it working, and your qualifications to start such a business.
You should also formulate a detailed budget and provide any documentation on the assets on which it is based as well as the capital that you have already dedicated to your business, added to a financial statement of your personal situation. Typically, the bank or lender will require that you personally guarantee the loan, and may even require that you obtain a government guarantee, such as is available from the US Small Business Administration.
Once you have applied for a commercial credit, the bank and / or the lender has 30 days within which you must decide on your application. However, often, it is harder to get credit than you think. Since many small businesses have failed lately, banks and / or lenders can act cautiously before extending commercial credit. However, if you are denied a business credit, you should not be discouraged; The bank or the lender must give you the specific reason why they denied it, so maybe you can redesign your business plan and later re-apply for the credit. In the end, there is always a solution for you. If you need an unconditional fast loan, Cashfloat is the answer.