For many aspiring entrepreneurs, the single greatest deterrent to them starting a business is a lack of access to finance. Banks and other traditional lending institutions tend to make it difficult for startups especially to access loans due to their strict lending conditions. It’s advisable therefore that as a startup looking to access financing you seek the counsel of experienced professionals in the area of finance, as they understand the nuances involved in that sector and will be better able to instruct you. Formed in 1997 and having established a global recognition as experts in the area of accounting, Spira Twist and Associates fits this bill. In this article accounting firm Spira Twist explains how to get a loan when you’re a startup.
Deciding which type of lender as well as the type of loan that you are going to apply for should be done before you start submitting any applications. There are some loan facilities that will suit a startup more than others, and knowing these beforehand will save you time as you won’t be walking into every loan company trying to see which one of them will be willing to offer you a loan.
In addition narrowing your options will allow you to focus your applications on meeting the necessary requirements of each selected company which will increase your likelihood of having a successful application. The Business News Daily, in their article, A Guide to Choosing the Right Small Business Loan (http://www.businessnewsdaily.com/7695-small-business-loan-guide.html) had proposed the following questions to consider, which would help you to decide which kind of lender and loan you should choose;
How much money will you need?
It is important that you don’t under estimate the amount that you need, as you may find yourself running out of money sooner than you expected. It is equally important that you don’t over estimate either, as too large an amount may cause loan agencies to shy out of the agreement especially if you don’t have a proven track record.
What will the money be used for?
Be very clear about what the money that you are seeking will be spent on. Lending agencies want to know that you are going to hold yourself accountable for the funds that they are going to lend to you and that you will not abuse it, but will instead invest it wisely, so they can be guaranteed repayment.
How soon do you need the money?
Lending agencies want to see how prepared you are to actually get started in business. They want to know that you are ready to go, and the finances that they provide will be the final piece of the puzzle. Any hint of unpreparedness may cause them to decline your application.
How long will you take to pay back the loan?
Lending agencies want to know how soon you will start generating income, so that you can pay them their money back. They also want to see that you do have some sort of plan for repayment. They likely won’t lend if it appears that paying them back their money, has not figured in any of your planning.
What collateral, if any is needed to secure the loan?
Most entities will require collateral; this of course will ensure that lenders have some way of recovering their money if you are unable to pay them back. If you do not have collateral, do not be dismayed, there are several loan facilities available, usually offered by the government that may not require that you put up capital. The US Small Business Association is one such example, though you must meet certain eligibility requirements to qualify. You may visit this link to see their criteria; https://www.sba.gov/loans-grants/see-what-sba-offers/sba-loan-programs/general-small-business-loans-7a/7a-loan-program-eligibility. Check with your local organization that is responsible for small businesses to find out if such a facility exists in your country.
If you are looking to start your own business, but face a challenge where capital is concerned, don’t be discouraged. You will be able to gain access to capital by adequately answering the questions stated above, and doing your necessary research. There are myriads of funding options available, that will provide you with the funds that you need, so that you will be able to get your startup off the ground.