If you have been thinking of starting a small business, then you will be glad to know that you are not the only one thinking of the same. But with the economic crisis, many people are being laid off their jobs and resorting to small businesses as a source of livelihood. However, it is always better to invest your money in something, than to lose it in worthless ventures. So how do you start a small business? You don't need an expensive mansion to start a business. All you need is to put up some cash and see the money come rolling in.
There are several options available to you in this regard. For starters, you can go in for a loan from your friends and relatives. This option has several disadvantages. For starters, you cannot be sure that they will really lend you the required capital for your business venture, as most of the times, individuals try to borrow money even if they don't have any employable skills to back them up.
Or you could approach your local bank. Banks usually do not offer loans to new businesses. Moreover, banks want to have some assurance from you that you will pay back the loan on time. Since a business requires large sums of capital to get started, you may find it difficult to get a loan from a conventional lender. This is where non-traditional financial institutions like private investors help you.
You can also approach the Small Business Administration or the SBA for assistance. However, you will have to pay a fee for their service. If you don't want to spend that much money, then you can opt for other sources of funds such as the Internet, Venture Capital or Individual Voluntary Arrangements (IVA). However, these sources take a lot of time before you can get a loan for your business. The main advantage of small business loans is that they are very easy to get approved for and you don't have to wait for long term loans like commercial loans and business bridge loans.
The SBA can give you tax benefits depending on your income. In order to get SBA business loans, you should apply for them first. This way, you will be able to provide proof of your current or past income. Your income will determine the amount of capital you are eligible for. The SBA also has requirements that you should fulfill before you can get a loan.
The SBA has an online system called Fast Application. This helps applicants to get quick access to the loan database. Applicants can choose to apply online for SBA loans or via mail. When you apply for this loan online, you need to have . . . . . . all the necessary personal and business information ready. This includes your personal as well as business licenses or certifications.
Your business plan plays an important role in getting the loan you need. You should present a detailed business plan to your lender. Your lender needs to see that you have an idea about the plan and the capital you would require in order to start your business. Your business plan should include the market you are targeting as well as your estimated profit. It is always advisable to present a business plan to your lender before applying for a loan.
The SBA has various programs that help small businesses get small business loans. One such program is the Small Business Administration (SBA) program. The SBA has several grant resources as well. You can make use of these resources to finance your business. There are also a number of lenders available who specialize in small business financing.