The SBA does not make direct loans. They do, however, provide loan guarantees for small business owners. The process is straightforward although not without a serious amount of research on your part. You should take your Business Plan to a commercial bank for initial review. (Hint: Start with the bank you already have a relationship with through your business account.)
Venture capital is a possible source of funding for new, relatively unproven enterprises that appear to have promising futures. However, such money often is hard to come by.
How do you measure up to other businesses in your industry? One of the things that banks do when considering loan applications is measure your financial status against those of similarly sized companies in the same industry.
If your business is a startup company or if other credit criteria are not met, you may feel there is no program for you. In fact, the lender may consider your proposal but require a loan guaranty. If you cannot provide a guarantor/co-signer, they will normally seek this guaranty via the U.S. Small Business Administration (thus the “SBA loan”) or other state operated program.
For my business to really be profitable I need to take it to the next level in order to get bigger orders. How do I know how much money to ask for and for how long can I get it?
Roberto has worked as a mechanic in the mid-valley area for over 15 years. He is considered by to be an excellent mechanic with and instinctive ability to fix and repair cars. While he can also do some body and fender work, he prefers the mechanical side of the business. Roberto has wanted to own a business for years. In preparation he has taken a few night classes in automotive repair and even attended a few seminars by the Small Business Development Center. After two years of classes, Roberto felt he was ready to go start his business.
Here is the reality of starting a small business with borrowed money -- this type of money is scarce, costs are relatively high and the competition is significant. Small business loans are not simple to get because of the work you have to do to develop your business plan first and then your loan proposal.
Whether you are a startup business or are expanding your current operations, if you are thinking about borrowing money, there might seem to be a great deal of mystery surrounding the process. Just knowing some guidelines may take the mystery out of the process.
Bankers review loan requests using many criteria. One set of criteria is often referred to as the "Five C's of Credit." The five C's are character, capacity, capital, collateral, and conditions. Let's look briefly at some of the specifics of the five C's.
Obtaining a loan for an existing small business can sometimes be very difficult. It is even more difficult for a new "Start Up" company. It is, however, usually possible to do so if the owner or prospective owner is willing to follow some basic steps.
Knowing the right place to look for funding is half the battle. Traditional venture capital businesses tend to look for investment opportunities in companies with the following characteristics...