Many potential entrepreneurs are hampered by one major factor, insufficient funds. There are several viable options that one can resort to raise funds to set up a new business. Some common alternatives include floating personal savings into the business, borrowing from a few friends and family while relying on the existing trust that you will repay once you start recording profits or significantly, knock on the doors of banks for a loan.
Complexities of Bank Loans
The other options are highly recommended not only because they are easy to be granted, but also because the amount borrowed in not subjected to interest rates. Unfortunately, personal savings and soft loans from your friends and families may not be sufficient to jumpstart your new venture. In situations where more resources are needed, the best option is to ask for a small business bank loan. The problem with bank loans lies in the complexities that one has to undergo. One has to endure a series of screening before the loan is granted. At times, some people give up along when the humiliation becomes unbearable. Don’t be discouraged though, as there are an abundance of available options and suppliers when it comes to loans for business.
Giving up in your pursuit for a loan to finance your new business venture, or not trying out altogether are non-options to serious entrepreneurs. The fact is, many loan applications are rejected by the banks. Before hanging up your gloves, it is worth noting that a bank loan is the most convenient source of funding that you can access. You may decide to go into a partnership with other people, but this would mean that you jointly own the business, and therefore profits must be shared. You should therefore research well and make the right moves and your loan application stands a high chance of being granted.
Requirements of Business Loans
There are so many banks that can grant a start up business loan, atleast with minimal complications. You should review the requirements of each bank and see to it that the requirements are sufficiently fulfilled. Please note that the bigger banks are likely to have some tougher requirements that you might not meet. Some would gladly grant loans to established businesses and not start ups. To be safe, try out smaller banks that specialize in funding small businesses, they are after broadening their client base; they are likely to listen to you.
Since your business is in great ideas, describe your aspirations well on paper through your business plan and elaborate how you intend to repay the loan. You must prove that the business is viable, sighting a few real examples. Furthermore, you must possess impeccable negotiation skills to convince the bank officials to grant your request. Don’t appear unrealistic and agree to repayment plans you are likely not to manage. Also, don’t ask for more than you really need. Remember, every penny you are given will fetch interest; therefore, apply precisely for what you need.
You are likely not to have your request granted on the first attempt. When one bank turns down your application, find out their justification and try to meet it. Correcting the mistake, approach the next bank and who knows, you might get lucky. Don’t nurse your dreams and sleep on them, get a loan and make your dreams a reality!