According to a blog in a recent edition of the Christian Science Monitor, the ranks of the self-employed are growing, and with it, a rising need for the small business loan. In fact, small business startup loans backed by the SBA have gone up 90% in the Tampa Bay area in just one short year. The trends that the Monitor identified and the Tampa Bay area are showing us is, in a microcosm, what’s happening across the country. As the ranks of the unemployed grow, certain age brackets (35-44 years old and 55-64 years old) are fast becoming the new entrepreneurs. Weary of job seeking in the recession economy, these people are turning to business ownership.
This means that many people who have never sought home business ownership before are suddenly in the market for loans for small businesses. If you are among the ranks of the unemployed who are now looking to become an entrepreneur, you may wonder what it takes to secure a small business startup loan. Unlike personal loans, which don’t have a great deal of criteria attached, a small business startup loan actually has quite a few requirements. Following is a step by step guide to assembling the information you need:
Determine how much money you realistically need and how it will be used once you receive it. If you don’t know how to estimate, hiring a business consultant is an excellent first step.
You’ll need to draft a business plan. Your potential lender wants to see how well-thought out your business is, so make sure it’s a comprehensive and well-presented plan. You’ll need to make income projections and discuss how your business will fill a niche in the marketplace. Again, if you have trouble, a consultant is a great help for this step.
Shop for lenders, keeping in mind there’s more out there than your typical bank. In fact, many typical banks have scaled back business credit lines during the recession. If you are denied credit, look somewhere else. The SBA offers many different kinds of loans; micro-lenders are another great source of loan funds. Peer-to-peer lending is another great way to finance loans if you cannot get help from traditional sources.
Once you have received your loan funds, protect your business’s credit by always paying your bills on time. Building up an excellent business credit score will give you a better chance of borrowing more money if you ever need it.
|
