Funding Strategies for New Business Owners

Banks used to give startup loans to business owners based on factors like their personal credit, experience, and business plans. All too often, small businesses go under and banks loose most of the money they loaned. This is why they instated new rules that determine who can get loans. Now they have rules in place that make it impossible for business owners to obtain loans unless they have business credit, or lay down some sort of personal guarantee.

To help you get accepted for a bank loan you will have to obtain some sort of business credit. You can either get a business credit card or start making payments to a company that reports to business credit companies. It takes some time to build up credit, but it will help you in the end. Anyone can obtain a business credit card that lends about $1,000 dollars, but never give your social security number or use your personal credit to get one. If you go the other route, just make sure that the company reports on time payments, and remember to always pay before the bill is due.

While you wait for your business credit to build up, start making your business plans. You probably have a general idea of how you want your company to run, but you need to cover every aspect of your business before you go to a bank. Preparedness is a major part of funding strategies as it shows you are eager and ready to work. Decide on the layout of the building, employee schedules, sale prices, merchandise, and how you expect to grow over a period of ten years with week by week goals. The more you can prove the stability of your business, the better.

Asking for Loans

Now you need to put all of your funding strategies to use. Go to the bank and ask them three important questions to ensure they are qualified to handle your requests:

1. What will your bank loan me without financials?

2. What is the current debt-to-income-ration you are using?

What is your minimum accepted credit score?

You will have to fill out an application form and they will have someone revise it to determine whether you will be accepted and what the premiums will be. Never ask for more money than what you really need for a loan.

If you fail to get a loan you can choose to go to a different bank or lender, wait to increase your business credit further, or try putting down a personal guarantee. Putting down a personal guarantee is not recommended since it puts your assets at risk. If you need more help on funding strategies you can go online for more information.