Small Business Financing For Beginners
When you decide to start a small business or need small business financing to help expand your existing business, there are a number of ways to go. All methods of financing a business have advantages and disadvantages, often depending on your individual business situation. From raising the money yourself, to loans guaranteed by the Small Business Association to borrowing from friends or family, you should weigh each of your options carefully before deciding how to finance your business’s needs.
Bootstrapping
Simply put, bootstrapping is when you use your own money to finance your small business, often on a shoestring budget. It’s one of the most popular methods of starting or financing a business, and one of the least expensive. You don’t have to pay interest to anyone you’d otherwise have to borrow money from, and your business’s net worth will be positive right out of the gate. What’s more, you and your business will generally be in a better financial position in the eyes of future lenders should you want to secure more traditional financing down the road.
The downside of bootstrapping for small business financing is that your business will likely be perpetually short of cash. If you don’t have much in the way of funds available, it can really limit what you’re able to do to grow your business.
SBA loans
The Small Business Association (SBA) helps small businesses obtain small business loans. While the SBA does not actually make the loans themselves, they do guarantee them, helping reduce the risk to lenders and encourage them to lend to more businesses at more favorable terms. There are several different loan types offered through the Small Business Association, from disaster recovery loans to micro loans. SBA loans offer ten year terms, and you can blend real estate and business acquisition loans together, which can be quite convenient.
On the downside, the fees associated with SBA loans can be on the high side and the maximum amount you can borrow depends on the SBA’s budget. The program can be shut down completely if there is a lack of funds to guarantee loans. Qualifying for SBA loans requires 2 or 3 years of tax return information, and you’ll need to put up some collateral.
Borrowing from friends and family
Borrowing money from friends or family to finance your business has many advantages, but it can also cause problems you don’t want to deal with. While you may not have to pay interest (or at least not as much as you would pay to a bank or other forms of small business financing resources), if you should have financial difficulties that make it hard to repay the loan, you may find that your relationship with that friend or family member becomes strained. Money can cause problems in even the best of relationships, which is why I don’t recommend it, even if you can obtain favorable terms.
about 7 months ago
There are a few reasons to choose where a loan comes from:
1) What is the rate for the loan
2) Will I be able to go back to the source for more funds
3) Will they sell my loan to someone else
4) Will they service my loan (online access etc)
5) Is there a penalty for pre-payment.
6) How quick will they be to call in the note if I'm late in paying
7) Will they provide extra services to help my business.
So – if you can get a good feeling about BDAs – then go for it.
Otherwise if you qualify for a loan from a leading back – you may get more of the above in your favor.
about 7 months ago
As far as I know, they just give you the telephone number to an insurance agent, who will try to get you quotes.
You don't get any "special deals" by using their agent.
about 7 months ago
A momma after my own heart! I've been a shoestring online marketer for over a decade, and now do consulting for new work at home start ups.
There are SO many ways to promote your site for free, the real problem is information overload when trying to learn the ropes.
The best way to tackle is to schedule a few hours a week to your marketing and jump in with one type of advertising method at a time.
I suggest to most of my clients to start with a press release and a few articles about the industry they are in. These two methods are often enough to get the traffic rolling enough to see is the pages are converting sales properly and allow for tweaking and planning processes.
Feel free to check my profile and contact me, I would be glad to spend an hour or so with your out of the box promotion ideas .. no cost or anything, it is my subject of passion.
Best of luck to you and your daughter, congratulations on the launch of your site.
about 7 months ago
SBA does not provide direct loans, but rather guarantees loans availed through their partner financial institutions. You will need to satisfy the lender's requirementsfor the loan, as assessed by the bank, before you can get SBA guarantee. This would mean showing the bank your credit history, business plan, tax forms, financial assets, collateral.
Note however that you need to pass through 3 criteria before you can avail of SBA loans, and these are:
- stake in the business (SBA requires borrower to have invested 25-50%)
- submission of a strong business plan
- good personal credit rating
Good luck!
Isabel Isidro
about 7 months ago
You could apply for a SBA microloan:
Typically you have to be declined by a bank in order to receive a Minro-Loan. Here is what banks look for in business lending:
Good Luck
Mr BizPlan
Oh yeah…don't forget about http://www.prosper.com
about 7 months ago
Go online and see what free thing are available, do free community activities, library…community events
I lived on a very limited income for many years, I understand how hard it is to not be able to do certain thing.