Friday, June 16, 2017

Understanding Small Business Financing

If you think you cannot obtain a small mobile business loan due to the current economic climate, then you should get rid of that mindset because thanks to Small Business Administrations and other types of loans that are available from companies like Five Point Capital, you do not have to prepare to close your business. Research is essential in seeking small business loans and this is something that some small business owners do not do enough.  Here is what the Small Business Administration has to say about successfully applying for business loans. The first step is a good business plan or proposal.

The Loan Proposal

In the business loan proposal you need to state your name and address, the name and address of the business, the amount of money you need and how you plan to repay the loan once your business turns a profit. The executive summary is the next part of the proposal and it states how you will use the loan to fund your business or cover business expenses. You also want to include why you should get the loan and any credentials you have that make you an effective business owner. Talk about your future plans to expand the business within the next few years and how you plan to market it to potential customers. Include your financial statements in the proposal and any co-business partners who will join you in the business.

What If I Have Bad Credit?

The first step in obtaining a small business loan with bad credit is to get a copy of your credit score and report. Pay down the debts you can afford to pay and fix any errors on the credit report by sending copies of receipts that prove you paid off certain debts on the credit report. If possible, seek out a friend or relative that has excellent credit and inquire about having him co-sign on the business loan. You can also apply for a small business credit card in order to establish good credit. If these methods are not enough, you should save up enough money for a large down payment since those with bad credit often do this when receiving a loan.

How Minorities Can Get Business Loans

Check out the Minority Business Development Association’s website because this is sponsored by the federal government for the purpose of getting business loans as a minority. This website lists state and different cities’ resources for minorities to obtain loans and you will also find articles on getting funds. You should research state and local nonprofit organizations that offer business loans to minorities.

Business Loans for the Disabled

The Patriot Express Loan is sponsored by the Small Business Administration and it primarily assists disabled veterans in obtaining business loans. Disabled veterans can get up to $150,000 in loans and the funds can be used to buy a building, equipment and other items associated with operating a business. In Illinois, aspiring business owners may qualify for the Minority, Women Disabled Participation Loan Program. Disabled business owners have to own at least 51% of the business and have less than 500 employees.

Ways to Supplement Your Business Loans

Just because you received a few business loans does not mean that you cannot benefit from other sources of funding to supplement them. If you have substantial funds in your savings account, use part of the savings to fund the business. Also seek donations as gifts from friends and relatives instead of other gifts during the holidays.

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