You’ve come up with the idea, you’ve done your research, and just one thing stands between you and being a small business owner: financing.
While there are many choices when it comes to funding your new business, most lenders have similar requirements. Before heading to the bank, take the time to do you research and learn about the financing process. Below are four important things to know about financing for small businesses.
1. Have a solid business plan
No matter how wonderful your idea is, lenders are not going to want to invest if you do not have a strong business plan. Your business plan should provide information such as an explanation of the services you’ll be providing, details about your niche, and an overall blueprint for your business.
A good business plan should also include plenty of facts; do your research on your area, target market, and competition before composing your plan. Likewise, create realistic projections about the growth of your business for the first five years.
Lastly, a good business plan does not have to be a novel. It should be long enough to include relevant statistics and facts, but not so long that it is difficult to find or reference information. There are a number of free resources online for assistance in creating a business plan.
2. Know your credit history
If you have a history of late payments, large amounts of debt, or have declared bankruptcy in the past, you may have difficulty finding financing for your small business. Lenders may use your success – or failure – at personal financial management as an indicator of the potential financial success of your business.
Before meeting with lenders, research your FICO http://www.fico.com/ score, which is a summary of your credit risk. Your FICO score, along with your credit score and other financial factors, may impact your ability to get a loan, as well as what kind of rate you are offered.
3. Research specialized loans
Before applying for a small business loan or seeking out investors, research whether or not you may qualify for a specialized loan. There are a number of government programs http://www.sba.gov/content/microloan-program in place to assist those who may have been previously (unlawfully) discriminated against for small business funding. This includes, but is not limited to, women, minorities, veterans, business owners with disabilities, and business owners in rural areas.
4. Expect a long process
Receiving financing for a small business does not happen overnight. Before applying you might feel buried in paperwork; many lenders require background checks, resumes, projected financials, business licenses, tax returns, and business plans along with their applications. In addition, many lenders may take as long as 60-90 days to complete the lending process.
Starting your own business can be equal parts thrilling and terrifying. However, having a better understanding of small business financing can help you get your financing and open your business faster.
While there are many choices when it comes to funding your new business, most lenders have similar requirements. Before heading to the bank, take the time to do you research and learn about the financing process. Below are four important things to know about financing for small businesses.
1. Have a solid business plan
No matter how wonderful your idea is, lenders are not going to want to invest if you do not have a strong business plan. Your business plan should provide information such as an explanation of the services you’ll be providing, details about your niche, and an overall blueprint for your business.
A good business plan should also include plenty of facts; do your research on your area, target market, and competition before composing your plan. Likewise, create realistic projections about the growth of your business for the first five years.
Lastly, a good business plan does not have to be a novel. It should be long enough to include relevant statistics and facts, but not so long that it is difficult to find or reference information. There are a number of free resources online for assistance in creating a business plan.
2. Know your credit history
If you have a history of late payments, large amounts of debt, or have declared bankruptcy in the past, you may have difficulty finding financing for your small business. Lenders may use your success – or failure – at personal financial management as an indicator of the potential financial success of your business.
Before meeting with lenders, research your FICO http://www.fico.com/ score, which is a summary of your credit risk. Your FICO score, along with your credit score and other financial factors, may impact your ability to get a loan, as well as what kind of rate you are offered.
3. Research specialized loans
Before applying for a small business loan or seeking out investors, research whether or not you may qualify for a specialized loan. There are a number of government programs http://www.sba.gov/content/microloan-program in place to assist those who may have been previously (unlawfully) discriminated against for small business funding. This includes, but is not limited to, women, minorities, veterans, business owners with disabilities, and business owners in rural areas.
4. Expect a long process
Receiving financing for a small business does not happen overnight. Before applying you might feel buried in paperwork; many lenders require background checks, resumes, projected financials, business licenses, tax returns, and business plans along with their applications. In addition, many lenders may take as long as 60-90 days to complete the lending process.
Starting your own business can be equal parts thrilling and terrifying. However, having a better understanding of small business financing can help you get your financing and open your business faster.
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