There is nothing quite so exciting to an entrepreneur as starting a new business venture or expanding an existing one. Following your passion and knowing that the success or failure of your business is on your shoulders alone is a great way to start each and every day.
Unfortunately, business requires capital, which means you may need a business loan. Obtaining a loan certainly isn’t the most fun aspect of running your business, but it can be achieved with a little work and planning.
Remember: You are your businessAs a business owner, you are your business. That means that when you approach your bank for a loan, they will look to you and your personal ability to repay the loan. It is imperative that you have a clear business plan and forecast for the future of your business, as well as a good track record.
Determining your needs and approaching the bankBefore going to the bank, you want to determine what your business needs actually are. Do you really need a larger warehouse? A larger sales force? More inventory? Or are they merely wants? A clear reason for the growth of your business is a requirement. No one can see the future, but you should understand trends and technology and changing economies and how they will affect the future of your business. Having this understanding will help in securing that business loan.
If you are starting from scratch or buying an existing business, not only will your grasp of the future be important, but your past will be as well. It is essential to exhibit experience in the type of business you are starting or buying. A strong management background will be necessary.
When approaching a bank for a business loan, they will look at your current and projected cash flow, your personal financial situation and the business assets you bring to the table. If you find your bank is not as excited about your business prospects as you are, the Small Business Administration may be able to help. They can guarantee a portion of your loan, which may encourage the bank to take another look at your proposal.
If you find yourself struggling to decide on the appropriate financing option for you and your business, it’s important to seek out professional help from a lender so you can learn more about the wide variety of opportunities available. When it comes to financing options, there are plenty of opportunities that will mirror the direction in which you and your business are headed. Financing options include several different types of loans—for example, there are 7a loans, 504 loans, a line of credit, term loans and more. Each of these loans has specific advantages, so when you’re looking for more information about business loans, use some of the aforementioned options as ideas for hashing out the appropriate loan for you.
Chasing your dream and following your passion can be quite satisfying. When in need of a loan to start your own business, begin with traditional banking options such as commercial loans and go from there. With a little thought and sometimes a lot of creativity, you’ll find the money you need.
This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material.
ABOUT THE AUTHOR Jim Malloy is the President of Commercial Banking for Conestoga Bank. Conestoga Bank has serviced Philadelphia and the surrounding regions for 120+ years.