Small Business Loans

Applying for a business start up loan

The leading cause of small business failure is insufficient funds. This may seem like an obvious point, but the breadth of business start-up expenses is often overlooked or misinterpreted; what seemed like an adequate investment can be lost along with your chance of success. Determine exactly what your business will need before you apply for a business start-up loan, and then stretch out your search to cover the range of professional, personal and private lenders that can finance your company.

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Types of Small Business Loans

Small business loans generally fall into three categories: government, commercial and private. A small business commercial loan will be provided by a bank or other financial institution, but it may be tough to obtain if your business is just starting out. The bank will want to know that you will be able to pay back the loan, and a new small business carries little guarantee for success. Your risk increases if your credit is less than perfect, although there are bad credit business loans available to help sustain your business.

If you are unable to get a loan from a bank, look to government resources that have been designed specifically to help small businesses. The most important source for small business government financing is U.S. Small Business Administration funding, or SBA loans. Although this organization won't be able to lend you funds directly, it will stand behind you in your loan application, reducing your risk in the eyes of the lender.

Finally, consider any friends and family members who are willing to lend you some money. This option is not for everyone, but if you decide to recruit some financial assistance from friends with the promise of high returns, be sure to treat the loan as a business investment rather than a personal favor.

Getting a Small Business Loan

Getting a business loan can be a very involved endeavor, but you can streamline the process with a solid business plan and some sound financial advice from a professional consultant. Before you begin to look for a small business loan online or through a bank, determine what exactly the loan will be used for and prepare for the worst financial circumstances. The steps to getting a small business loan can lead you to valuable resources that will continue to help your business, and the process will help you to evaluate your business expectations.

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