Every business requires cash to start, operate and sustain and achieving this is not an easy feat. It in fact manifests as a huge challenge for startups or new entrepreneurs. Most small business and startup loans range from $5000 to $5 Million.
Criteria for funding
Typically, startups and small businesses seek financial assistance from Government or the lending institutions. Most lending institutions and banks support a sound business plan. Businesses must convince banks of the real need for capital for generating profit. Banks are also interested in ensuring that there is a repayment strategy and potential. The involvement of the owners/entrepreneurs is also considered.
While different lenders seek specific information, most lending institutions generally look for a personal and business credit profile of the business owners, potential financial statements and/or projections, at least an year’s cash flow information, and personal guarantees from business owners.
First and foremost is honesty and integrity. Always be open and share information that may be necessary for the lender to communicate a decision. It may be easier for business owners to work with their existing bankers or with local Credit Unions or community banks which have personal interest in developing the community and their patrons.
Being educated of lenders needs and providing organized content to the lender enables a productive discussion and beneficial outcome for business loan applicants.