Regardless of what type of startup funding you decide to pursue, there are some steps you can take to increase your chances of getting financing. Taking the time to prepare a well written business plan, improving your credit score, and saving money to invest in your business can improve your chances of being approved. Additionally, it is important to begin building your customer base to grow your income potential for lenders. Lenders and investors want to see a business with happy customers that use more and more of your services.
Prepare a Solid Business Plan
No matter which option you choose to fund your startup, a solid business plan is important road map for future success. Potential lenders and investors are going to want to see that you have a well-developed plan established to operate your business successfully. They will want to make sure the financial projections are realistic and show the ability of the business to repay a loan and continue to have funds available to operate your business. Being part of a solid brand like Executive Image Building Services will help make lenders more comfortable.
Improve Your Personal Credit Score
A loan for a startup business will likely require you to have a strong personal credit score. The lender will not be able to use business history or credit to determine the potential success of the business. Instead, they will look at your personal credit history and what personal assets you have that can be used as collateral.
Save Your Own Capital
When applying for small business financing, most lenders are going to expect you to contribute anywhere from ten to thirty percent of the project costs associated with the loan you are getting. Lenders want to know you have a vested interest in the business and that you are going to do everything you can to make it successful.
Build Your Customer Base
Whether you are seeking funding to get your business started, or already have a startup business, building your customer base can help prove the viability of your business to potential funders. New businesses that can show a growing customer base and rising revenues will be more appealing to lenders than businesses that are not growing.
Create Financial Projections
It can take some time to obtain the financing you need for your new business. Whether your financial projections are part of your business plan, or a separate document provided to potential lenders, it is important to keep them updated. A lender or investor is going to want to see a clear financial picture based on your most recent business financials. A bookkeeper or accountant can help you prepare professional projections.
How do I get a startup business loan?
Getting a startup loan from a traditional bank is often difficult because most banks require that your business has been operational for at least two years. If you want to use a traditional bank, a HELOC is an option if you have good credit and equity. Alternatives to bank financing include crowdfunding and SBA microloans.
Do you need a loan to start a business?
You do not necessarily need to rely on loans to start a business. Many new small businesses use their own resources before getting a startup loan. Friends, family, savings, including short term credit card loans help start many small businesses.
Are there free government grants as funding for business startup?
Government grants are free. Small businesses might be eligible for government grants. It is worth checking out if there are any grants that align with your business type when considering your startup funding options.
Obstacles in getting a loan should not stop you from pursuing your dreams.
Finding financing when you are starting a business can be difficult, but there are several financing options available for small businesses. Your individual business financing needs will determine which option is best for you.