There Is Hope in Start-Up Capital

April 21, 2012 by  Filed under: Loans 

Many firms that are first starting up are finding themselves faced with the problem of finding a lender that is willing to finance them. This tends to be quite challenging because the lender has to be convinced that the business will be successful, and that the business will be capable of handling the loan payments. Lenders look for longevity and collateral in a business; although these are not conventional characteristics associated with new companies, there are still institutions that can supply funding.

Despite this dilemma, there are ways to get the help that you need. There are government programs and agencies out there that can help assist small business owners. One agency in particular that supports small business owners is SBA. As long as a solid business plan in place, a business owner can go to SBA for support, and they may be willing to guarantee up to 50% of a bank loan. They also have companies designed to help veterans get their companies off the ground.

If a borrower is unsuccessful in getting SBA to back a loan, they can apply for a business credit card. People who have good credit should put the credit card in the business’ name to build a good credit rating. This can allow for the business to eventually qualify for a loan with more beneficial terms. In order to avoid interest charges, the business owner should use the card moderately and make sure that the balance is paid off every month. This will help build a good credit rating, but keep in mind that business credit cards are essentially high interest business loans, and that their terms will always be less favorable.

Almost all banks or credit unions providing funding for new companies will have to posses some sort of collateral to put up against the loan. When put in this position, it is crucial to be cautious in choosing which bank to borrow from. There is a great chance that a different bank will be able to make a better offer; in fact, banks are willing to compete against each other on-line to loan money to borrowers. It is always important to make sure to read all the fine print when entering any deal to avoid potential disasters. As long as you stay meticulous, and you do the proper research you will be able to find a loan that fits your needs.

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