Small Business Financing (also known as start-up financing or franchise financing) refers to the means by which an aspiring or current entrepreneur gets money to start a new small business, buy an existing small business or bring money to a small Existing company to finance Current or future commercial activity. There are many ways to finance a new or existing business, each of which has its own benefits and limitations. As a result of the recent financial crisis, the availability of traditional types of small business financing declined dramatically.  At the same time, other types of small business financing have emerged. In this context, it is instructive to divide the types of financing for small enterprises into the two broad categories of financing options for traditional and alternative small and medium-sized enterprises.
Here is a simple yet practical guide on how to prepare to apply for a small business loan.
1. What criteria do banks seek to make small business loans?
Different banks or lending institutions may have different standards, but in general, in order to consider your application for a small business loan, banks require:
• The loan must be for a good business purpose. For loans guaranteed by the SBA, the business must be eligible based on size, use of loan funds and the nature of the business (no loans, speculation, passive investment, pyramid sales, gambling, etc.)
• You and your partner (s) are of good character, have experience and a good personal and / or business credit history
• The ability to repay the loan, reasonable to strong collateral (personal and business assets) is very important. SBA expects the loan to be fully insured but we will not reject an application to secure a loan if the only unfavorable factor is an insufficient collateral. And, of course, the owners must have the investment of personal capital in the business / skin in the game.
Money is the lifeline of any business, so if you are starting a business or an existing one is running, securing financing is an important factor, especially for small businesses.
SBA small business loans range from $ 5,000 (microcredits) to $ 5 million (the largest secured) with an average loan of $ 371,000.
5. How can you get financing to start a business since many banks want to finance growth?
Start-ups are probably the most difficult endeavors when securing financing. Many start-up companies are looking for family, friends and credit card financing. If the credit is solid, the business plan is strong and has sufficient personal resources to invest and collateral to ensure, the smaller community banks and other community financial institutions and Credit Unions may consider lending you money.
Your best option is the assistance of the SBA. Start by visiting the SBA website where you will find a wealth of information not only on how to secure a small but equally important loan, other services and training opportunities to help you succeed.
6. Are there associations that can help?
SBA works closely with a large network of partners who take advantage of SBA resources and are just a phone call away and are ready to provide extensive help.
• District Offices / SBA Branches – at least one in each state
• SCORE – (approximately 300 chapters across the country)
• SBDCs – Small Business Development Centers; (Approximately 900 locations throughout the country, associated with higher education institutions (universities)
• WBCs – Business Centers for Women (approximately 100 schools across the country)
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