Small Business Loan sources for your business
1) Your own savings.& asset
Yes, the first source for your business is your own savings or your property. This is the most popular source of business start up money. If your savings is not sufficient, you can get the loan by mortgaging or re-mortgaging their homes, or selling property or possessions.
2) Family and friends.
The second most popular source of business start up money is borrow money from family, friends and someone you know. Family and friends are often willing to lend you money. Most of the time, you have to presell your business idea to convince them to loan you money. Of course this presell is more in less formal way compared to business proposal loan from an investor or bank. After all, they believe in you.
3) Line of credit.
Line of credit is essential tools for your business especially for unexpected expenses. No matter how careful and detailed you’ve been in preparing your business plan, there are always unexpected expenses and expenses that you’ve underestimated.
Before you start a business, you should already have established a relationship with your local bank manager. By doing so, it helps to showing that your credit rating is in good shape.
4) A small business loan from a bank.
Bank is a traditional lending institution (such as banks and Credit Unions). It’s actually easier than ever to get a business loan, as long as you have a good credit record and detailed winning convincing business plan proposal to the bank.
If you are Canadian, don’t forget the BDC (Business Development Bank of Canada). Supporting business is their business and the BDC has several programs that provides customized term financing up to $100,000 for directly new businesses demonstrating long-term viability.
5) A Government related loan to encourage entrepreneurship (eg. SBA Loan in USA)
There are many government organizations which objective is to promote new business development or to help entrepreneur or businessman succeed in certain industry or type of business. Mostly this assistance includes financial support, such as small business loans.
6) Finding investors or Venture capitalists
There are many venture capitalists, private investor / lenders are willing to invest into new small developing business if you can provide them a winning business plan. They are willing to invest at the small business at early stage but they also worry of risking their money. Hence, you have to give a good presentation of your business plan and of course your self personality has to be trust worthy and responsible and confident person.
7) Government grant programs
There are government grants available, finding one that can provide loan for your new business will be an enterprise in itself .
Above are some of the sources only. It is advisable you choose a few that most suit you and do a more thorough study on each source and then only decide which is the best source or few sources and easier to get to fund your business.
Whatever you do, however, don’t depend on your personal credit cards for the business. It’s best to get the funds you need in place rather than risking your new business financially and it may damage your personal credit rating.
