Small Business Financing – The Money For Small Businesses is Out There
There are so many sources of small business financing you can access everywhere. Entrepreneurs certainly can capitalize their businesses from these small business financing opportunities that will be elaborated one by one in this article.
Business financing is often to be found on certain sources of organizations such as government, banks, investors and venture capitalist. It is imperative to take note on what the lenders need when you propose loan to them. Lenders will want to know about your business history to see whether your business has executed the business beneficially or not. They will also review track record of your company management. Poor demonstrated proposals, incompetent collateral, inadequate cash flow and deficiency of management are the general causes of numerous small business failures and these will become negative considerations for them. What you need to bring to them are the opposite ones and also a proven positive credit history that will support you to get a loan.
Now let us discuss the four primary sources of small business financing.
Government Sources (Small Business Administration or SBA)
These sources are common loan guarantee programs that will cut down the risk for lenders. SBA is supported by business experts who will provide consultation to business owners before they submit their proposals to the lenders.
a. The 7(a) loan guarantee program: This program offers repayment guarantees ranging from 75-85ir% depending on the size of the loan. Typically, this program assists small business which lack of adequate collateral.
b. The SBA Low Doc loan program: The approval time of this program will be around two or three days after the Small Business Administration receive the applications. There is just one form to be filled in for these loans.
c. The SBA Express loan program: This program addresses loans up to $250,000. The interest rate of this program perhaps higher than the other SBA programs, but this program can be categorized as loan guarantee programs with quick procedure.
d. Micro Loans: The loans are brought in by non profit community based organizations for totals up to $35,000.
Common or Traditional Lenders
These lenders are primary sources of loans to small businesses. They are credit unions, banks and finance institutions. Many of these companies have professionally experienced addressing the business loans and hold a small business section.
With a high profit potency, these sources are ordinarily business firms that are awaiting investment chances in businesses or companies.
These are usually personal investors who have lower amounts to invest than venture capitalists with investments chain from $100,000 to $1 Million and they are searching beneficial opportunities in a broad diversity of businesses.
From above mentioned sources, we know that small business financing are available out there. Therefore it is time to prepare your proposal to approach the institution that match to your needs as well as your qualifications.