Are you planning to pull the trigger and start your own business? Before you give your two week notice to your boss, you need to make sure you have the financing you need to get your new business off the ground.
Unfortunately, securing small business financing isn’t easy. The SBA reports that only 33% of new business loans are approved. The approval rate is low, because they don’t have an established track record.
A Business Starts With an Idea – And Funding
You may want to open the coolest coffee shop in town. You may want to start a new cloud computing computer. Whatever your business model, having a great idea isn’t enough. You also need to raise the capital to get started.
You have probably read success stories of entrepreneurs that started bootstrapped companies. like Ross Perot. He started his company with a $1,000 loan and became a multimillionaire. While it is possible to get started on a small budget, it isn’t possible to start a business for free.
If you don’t have the money yourself, you will either need to get a small loan or cash advances from local lenders.
How do you go about getting funding?
First of all, you need to accumulate the documents a lender will want to see to approve your loan or cash advance. These include credit score information, relevant work history, collateral, cash flow statements from previous businesses and endorsements from potential clients.
Never apply for a loan without doing your homework first. You should contact the loan officer to learn what paperwork they will need.
Here are some other things to keep in mind:
- Choose your lender very carefully. Larger banks normally don’t offer small loans, because the profitability is too low and the prepayment risk is too high for the time spent with underwriting the loan. It’s better to borrow from a credit union or community bank.
- Always reach out to a lending officer. They will give you an overview of the application process and give you advice on taking the necessary steps.
- Have a very articulate business plan. Banks have been more hesitant to issue loans to businesses based on the soundness of their ideas since the Dotcom Crash of 2000 and the credit crunch of 2008. They need to see well-supported financial statements and a detailed business strategy before they will approve your loan.
- Always answer questions honestly. It’s one thing to be overly optimistic with future projections, but lying about the value of collateral or your credentials is a sure way to have your application denied.
You can also look into applying for a loan through an online lender. If you choose the right lender and fill out your application correctly, you may be approved for a loan within 24 hours.. If you are thinking “where can I find cash advance locations near me”, then you can explore search engines for a quick, reliable, and hassle-free service to help you get the cash advances needed to finance your startup.
As long as you are thorough, do your research and answer all questions honestly, you will have a much better chance of getting approved.