The Small Business Lending
What is the number one factor in the success of
any business? In case you didn’t know, it is capital. Small businesses as well as large businesses live and die by
their level of funding. Proper funding can make or break any business. If you are considering becoming an
entrepreneur, several things are necessary to your business success. Number one, you need a business plan. No
matter what type of business you are in, a business plan is a must. If you are not financially able to fund your
own business, a strong business plan can help you garner venture capital funding or general capital financing from
banks, credit unions, and any other small business lending source.
Business Debt Service is a free resource for small businesses from all
industries, and is dedicated to helping small businesses search for loans and small business funding sources to
either start up a business or provide additional small business funding to keep their businesses running and to
meet their financial obligations. It is often said that banks are not extremely friendly to small businesses. That
is despite the fact that small businesses are the largest providers of employment in the country. Thanks to
intervention from government organizations like the Small Business Administration (SBA), which provides backing of
small business loans, banks have more confidence to lend to small business owners.
Venture capitalists also offer a business funding alternative. The primary
drawback from venture capital funding is that they typically require a huge chunk of your business in return for
investing their capital into your small business. It isn’t simply ownership based when it comes to venture capital
funding. With a majority stake in your business they want to control most if not all of the business decisions of
your small business.
For many people whose life dream is their business, they want to be able to run
their business as they see fit. They also want to be able to hold majority interest in their small business. It is
well-known that he who has the capital can dictate the direction of the small business and make all pertinent
decisions. This can be a very trying experience, but many people are willing to take a back seat and let the
investors run the show. For these people, maybe it is simply the concept of a little of something big, as opposed
to all of nothing at all. In either case, the price of venture capital funding can be extremely high and for some
it may be worth it, but for others, they would rather find another way to locate capital for their small
Search for Small Business Lending Sources
For those seeking to go a different path from venture capital firms, small
business loans can be a viable option. Finding a small business bank that caters to helping small businesses get up
and running can be a daunting task. Without a track record applying for a business loan can be froth with
challenges. Not only that, but if this is your first time applying for a business loan of any kind, the anxiety can
be overwhelming. Who do you contact? Where can you get assistance on the small business loan applications? Where
can you get help on your business plan? What are acceptable business loan interest rates? The Small Business
Administration (SBA) can be of great help for many if not all of these questions. Their function is to provide
assistance to small businesses and their service is free.
If you approach a small business lender in need of a loan and they require that
you have assets to back up the loan, if you do not have any assets, then you are trying to get an unsecured loan.
Some small business owners believe in their business idea so strongly that they are willing to put up their homes
as collateral for the loan. While this is extremely risky, meaning that if your business fails, not only do you get
to join the ranks of the unemployed, but you will also be without a home as well.
It is easy to visualize and actually feel the emotions that go through a small
business owner’s mind when having to make these types of decisions. However, many business owners believe enough in
their dreams and if no one else is going to give them a business loan, they may succumb to this as their only
alternative. This is absolutely the last option that anyone should take. It would be better to give a portion of
your small business to a venture capital funding firm than to take this kind of risk. The rule of thumb in the
business world is to play with other people’s money. Avoid having to use your own capital if at all possible. If
you do have to use your own money, then you should use as little of it as possible. Also, should you need to apply
for a business loan, try to get an unsecured business loan.
Investing in a small business is not an easy thing for banks and capital funding
companies to do. An organization of any type that funds a small business has to have a certain appetite for risk,
and the hope that their risk turns into great rewards. Small business banks and venture capital companies tend to
do their homework before deciding whether or not to lend money to a small business. Sometimes a small business may
be established and they may simply be seeking a short term business loans that will allow them to cover their
expenses and pay their bills and payroll until one or more of their clients pays an unpaid invoice.
If this is the case, then there are special companies that can buy the account
receivable from the company at a discount. These companies are called factoring companies. Essentially the business
factoring company will pay the company a fraction of an unpaid invoice. In return they will take it upon themselves
to collect the unpaid receivables. This type of transaction will give the small business immediate capital
necessary funding to continue on their daily operations; whereas the company that bought the accounts receivable
keeps the difference between what it paid to the company and what the account receivable is really
Every company needs a small business lender in their corner. Every company needs
that lender that will be able to provide them with the necessary funding in their time of need. Sometimes a
business needs more capital to purchase more raw assets in order to meet their demands. Sometimes it’s about
growing the company and a great small business lender can help. Having access to small business financial help is
something that every business should strive for. It is these types of relationships that might be the difference
between succeeding or going under.
The small business investment capital, needs to be lined up when you are doing
well as a business. If you approach a bank for a small business loans when your company is doing well, and when you
have a lot of cash, you are more likely to be approved for the money that you seek. What small businesses don’t
understand it that you should approach business lending institutions when you are in a position of strength. You
don’t have to use those resources at the moment, all you need is approval and the knowledge that when you need it,
it will be there.
Strong balance sheets make getting a small business loan extremely easy to do.
Weak balance sheets make small business lenders weary of your financial stability and make them wonder whether they
will ever get their money back. A small business should establish lines of credit from banks, credit unions and
other small business lenders, so that when the need arises they will be able to draw from it. As a small business,
understanding your funding needs, and taking action early enough will help you stay in business, grow your
business, and meet your business obligations.
How do you as a small business ensure your financial health? Get a list of the
top small business lenders and maintain open communications with them. You can contact the SBA for a list of top
small lenders. Find out what these lenders require and know what steps need to be taken in order to be approved for
a small business loan. Keep in mind that each time that you apply for a small business loan, it will negatively
affect your business credit rating. The more times that you apply, the stronger a signal of financial weakness of
your small business that will be sent to any new banks that receive a business loan request from you.
You may also want to look into the state and county that you decide to open or
relocate your small business. Many states and communities are looking for new businesses to relocate there in order
to provide jobs to their residents. As such, these communities may be willing to give special offers and incentives
to small and large businesses alike that choose to do so.