Running your own business is very exciting but it is extremely challenging at the same time
. New business owners may feel that they have a great business idea, but finding funding for that idea is difficult as they do not yet have a corporate credit to show the lender what type of borrower they are.
A great option you have is a business start up loan. Like any other loan, you will be given the money with a contract as to when you are expected to pay it back. Most lenders want a monthly payment plus interest while there are a few lenders that ask for a lump sum payment (this is rare.) A business start up loan can be your dream come true when you are financing a small business but how do you go about acquiring one? Here are some things you need to know:
1. Banks are concerned about business start up loans as a large majority of small businesses fail within 1-2 years of opening their doors. You need to show the lender that you have what it takes to say in business. Prepare a good business plan that is easy to read and will quickly convince the lender that you are not a risky investment and that you will be able to weather any storm that comes. Your experience will do a lot for you as lenders will be able to see your personal drive to succeed.
2. Speak with a lender that you have personally dealt with. If you have a car loan or personal loan with a local bank, talk to them about a business start up loan first. They usually will help you because they know what type of borrower you are. Since you have proven to them that you can pay your personal debts on time, they will see you as a lower risk. Your personal credit rating will play a large role in your ability to gain approval for the business start up loan.
3. Dont give up if you are rejected for a business start up loan. Chances are you will be turned down at least two times when you are trying to secure funding. At this point your best option is to turn to friends and family members or angel investors. You need to be prepared to risk some of your savings to start up the business as this shows other investors you are committed to the success of your new business.