Ideas Home Biz Kits Entrepreneurs Biz Opportunities Mom Life Cafe Cities
Featured Advertisers
Featured Advertisers
Become a KinderSigns Instructor
No Royalties. Certification, Marketing Tools,
Hand Outs & Curriculum
Looking for a work at home JOB?
Check out the new Bizymoms job bank! New jobs added daily!
Event Planner Career Kit is Live!
Sign up for our Event Planner newsletter to Learn More about this great business!
See Your Featured Ad Here
Click here to see your ad on this page! Or Find other advertising options.

How To Finance The Small Business

By Robert Moment

If you have a great business idea or plan, or you would like to expand your existing business, don’t let a lack of funds stop you in your tracks. There is a wide variety of financing available for small businesses. Let’s take a look at the financing opportunities that small business entrepreneurs can take advantage of.

While the financing sources comprise diverse institutions, such as banks, government sources, venture capitalist and “angel” investors, it is useful to look at what all lenders, regardless of category, want when they loan money or invest in a business enterprise.

When you seek money for an already existing business, lenders will be interested to know about the history of your business; whether it has a track record of good management and good performance. Lenders will be keen to know whether you have the ability to repay a loan and will look at your present cash-flow to see whether it is sufficient to enable you to meet your current obligations as well as to take on extra debt.

Your credit history will also be under scrutiny. A good credit history will help you to get a loan. If you have had problems in the past, it is best to bring these to the attention of the lender yourself and explain how you have turned the situation around.

You can also bolster your chances of getting a loan by putting up collateral. This reduces the risk for the bank in case you default. And finally, if you can show that your own personal money is invested in your enterprise then lenders will have more confidence in the proposition.

Many small business loans are turned down due to poorly presented proposals, inadequate collateral, insufficient cash flow and a lack of management experience.

These are the general points that lenders and investors are interested in, now let’s look at the main sources for small business financing.

1. Traditional Lenders: Banks, credit unions, and finance companies are the main source of loans to small businesses. Many of these institutions have a small-business department and are experienced in handling small-business loans. The most logical place to start is with the institution which handles your business and personal banking. You should do your best to get to know the manager and personnel at the bank. So don’t try to save time at the ATM! Being friendly with the bank staff will not guarantee you a loan but it will make it easier for you to make your loan presentation.

2. Government Sources, the Small Business Administration (SBA): The programs of the SBA work in conjunction with the traditional lenders, as they are mostly loan guarantee programs that reduce the risk to lenders in case of default. Some of the popular SBA programs are as follows

a. The 7(a) loan guarantee program: This program helps businesses which lack sufficient collateral, by providing repayment guarantees ranging from 75-85% depending on the size of the loan.

b. The SBA LowDoc loan program: There is only one form to fill out for these loans and approval time is rapid (within 36 hours from when the SBA receives the applications. These loans are only for amounts up to $15,000 but they can be used for start-up businesses.

c. The SBAExpress loan program: This is another quick-procedure loan guarantee program, but it covers loans up to $250,000. The SBA guarantees 50% of these loans, and interest rates in this program may be higher than in the other SBA programs

d. Microloans: These are loans for amounts up to $35,000 which are made by non-profit community based organizations.

3. Venture Capitalists: These are typically firms that are seeking investment opportunities in companies with a high profit potential. Usually when you take money from a Venture Capitalist firm it means that you have to give up some ownership and control to the investors. If you are thinking of going in this direction, then it is imperative to investigate the VC firm, and make sure that it has good references.

4. Angel Investors: These are individual investors who are looking for good opportunities in a wide variety of businesses. You don’t have to be a high-tech company to attract these funds. Angels have smaller sums to invest than venture capitalists, and their investments range from $100,000 to $1 Million. There are a good number of angel investors in the U.S. and Canada, with at least 170 investment groups or angel networks spread around both countries. You can find the angels by making a search on the Internet, looking for angel associations in your particular area of business. You can also inquire with your local small business librarian, the chamber of commerce, your local SCORE office and with other non-competitive businesses.

As you can see from this brief survey, the money for small businesses is out there. Prepare your proposal carefully, and approach the institutions or individuals that best match your needs and capacity.

Robert Moment is an innovative business strategist and author of ,"It Only Takes a Moment to Score" and upcoming book "Invisible Profits: The Power of Exceptional Customer Service". Robert show entrepreneurs how to successfully build and grow profitable service-based small businesses. Visit http://www.howtostartyoursmallbusiness.com and download the FREE Special Report " 17 Profitable Ways to Turn Your Ideas into Wealth."

Back To Page Top   I   Back To Category  I    Back To Home
Getting started
The Benefits of Home Based Business
Business Mission Of Marketing Plan
A Home Based Business Requires Hard Work!
Selecting a Right Home Based Business
Earn Extra Income While Work At Home
Internet Protect Privacy Rules
Elements Of A Business Plan
Writing Strategic Business Plan
Work At Home Jobs For Moms
A Winning Business Plan
Home Business Tips
Growing Your Small Business
Small Business Owner
Keys To Business Success
Business Leadership
Achieving Sales Goals
Start An Online Business
A Home Business Mentor
Operating A Successful Business
How To Finance The Small Business
Basics For Starting Online Business
How To Start A Home Business
Fairures Of Business
Home Business Resources
Improving Self Confidence
Legitimate Home Based Business
Starting a New Home Business - Top 5 Mis takes
Get Creative With Child Care While Working From Home
Tips to Grow Your Business
Why Home Businesses Fail ?
Roadmap to Online Success - One Hour a Day, Five Days a Week
Is A Home Based Business Right for Me?
Planning Is The Most Important Part Of Starting A Home Business
Loath the Rat Race? Ditch your job.. 7 Benefits of Being a Home-Based Entrepreneur
Starting a New Home Business
Want Fast Business Success? Set Your Goals... Part II
Want Fast Business Success? Set Your Goals... Part III
Work At Home Benefits
Ask Yourself: Is Working at Home For You?
Home Business: Success Starts in the Mind
Online Business Tips
How To Name Your Business
Starting Up A Home Based Business
Steps To Write A Business Plan
Business Ethics Questions
Benefits of Owning a Home Base Business
Steps To Internet Home Based Business
Ideas To Get Motivated
Self Employment Information
Ideal Business Attitudes
Make Money From Home
Benefits Of Being Your Own Boss
Part Time Jobs With Benefits
Achieving Success
Writing A Business Plan
Start Work At Home
Choosing A Business Name
So Thankful To Be A Work At Home Mom: My Story
New and Popular Kits
Tutor Monster
Is the Tutoring Business for you?
ExpertVA
Are you a Virtual Assistant by nature?
Candy Wrapper
Is Candy Wrapping the best business fit for you?
GET FREE BUSINESS IDEAS NEWSLETTER
 
Copyright © 1997-2007 Bizymoms™. All rights reserved. Please view our Privacy Policy & Content Disclaimer.