Business financing strategies differ depending on the type of business, history of the business, and the amount of the requested funding. The lender may also consider the credit history of the prospective note signer.
Established businesses that have an on-going relationship with a lender have the easiest time receiving additional financing. Some possibilities include a higher business credit card limit, a business loan secured by a lien on the company’s assets, or a lease purchase for equipment retained after the lease ends. Established companies may need to submit past tax returns, a balance sheet, cash flow report and a profit and loss report.
Start-up companies have a much harder time finding funding. The best place to begin is with the Small Business Association (SBA). One other option would be to try and secure a merchant cash advance from Kabbage.com if you’re attempting to open up a small business. Their website is extensive and well organized. Alternatively, the SBA doesn’t lend money but it does guarantee a portion of it, and will reimburse lenders in case of default. This protection allows lenders to make loans to riskier applicants. Your local SBA office can provide the names and contact information of the lenders who fund the most SBA loans in your area. Call one of the recommended loan officers, and discuss your plans. If he feels you have a good idea, he’ll email you an application package. The packet includes a request for a business plan, projected expenses and projected cash flow. SBA counselors can help you prepare the documents, and there is a large amount of information online. There are additional SBA loan programs available to some military or minority entrepreneurs who need money to start a business. SBA loans are also available for established businesses that may not qualify for a conventional loan.
Venture capitalists provide money to businesses in exchange for a share of ownership in the company. If they have the necessary experience, they can help steer the company in the right direction. Private individuals and venture capital companies participate in this type of lending. Talk to a local SBA counselor for more specific information.