What is a
These types of loans are made by many institutions and they have
a set of requirements that must be met. They will typically
review your financials and require a personal guarantee on the
loan. Some require putting up other assets as collateral. The
most common of these is the SBA (Small Business Administration) loan.
inquiring about financing, ask yourself the following:
How do you define
your need? Do you need money to expand or as a cushion against
•Do you need more
capital or can you manage existing cash flow more effectively?
How urgent is your
need? You can obtain the best terms
anticipate your needs rather than looking for money under
In what state of
development is the business? Needs are most critical during
•For what purposes
will the capital be used? Any lender will require that capital
be requested for very specific needs.
How great are your
risks? All businesses carry risks, and the degree of risk will
affect cost and available financing alternatives.
How strong is your
management team? Management is the most important element
assessed by money sources.
Is your business
seasonal or cyclical? Seasonal needs for financing generally are
short term. Loans advanced for cyclical industries such as
construction are designed to support a business through
is the state of your industry? Depressed or stable Businesses that prosper while others are in decline will often
receive better funding terms.
importantly, how does your need for financing mesh with your
business plan? All capital sources will want to see your
plan for the start-up and growth of your business.