No matter how good of an idea or operation model you have, you cannot start an establishment without money. A lot of people struggle to get started simply because they cannot secure the funds to make their very real and concrete ideas a reality. Securing business loans is practically the only way for small, local shops to get off the ground. Since the economic crisis of 2008, the little guys have been having a hard time finding sufficient financial assistance. Banks and other financial institutions are wary of taking on risks after what happened in 2008. Still, there is hope. Let's explore how you can go about getting financial backing so that you can get your shop up and running. |
First, Make Sure You Can Meet Criteria That Banks and Other Institutions Want to See
As previously mentioned, the economic crisis of 2008 has made financial institutions wary of taking on risks and lending out money. If you want to succeed in securing money from these places, you need to ease their minds. They want to know exactly what the cash will be used for. Be sure that it will be used on something concrete and safe. They will not lend for speculative purposes or high-risk endeavors such as pyramid sales or investments. Show them a credible purpose for the cash, and you are on your way. They also want a very solid form of collateral. This generally is property, so make sure you really want the financing before you put up your home to secure it. Finally, you need to have good credit and character history. Business loans are typically not given to those with criminal records or poor credit. Banks consider these people to be high-risk and want to avoid them.
The Interview Process: Be Confident and Truthful
Once you ensure that you have the above criteria nailed down as solidly as you can, it is time to go to financial institutions and try to secure a loan. Business loans from the large banking players generally are not given to start-ups. This is due to the inherent risk that comes along with a start-up. If you are instead seeking cash for growth, you will probably have more success at one of the larger banking institutions than a start-up, but these institutions generally like working with other big corporate players where their money is safe. Visit the bank your personal accounts are in and talk to a professional. They will help you prepare for the process, and let you know if you qualify for their lending program. Do not be afraid to go to smaller community banks and credit unions. Believe it or not, the little guys are more willing to lend to the little guys. Business loans vary from institution to institution. You will be required to bring different information with you to each interview, but the credit history reports both for your operation and your personal life will always be required.
Besides these things, there is not much you can do except hope and see if one of the institutions will give you the money. If you can't get cash, which will probably be the case for most start-ups, you should try to get financing from family members, use credit cards, or invest your savings into your idea.
When looking for business loans, NH residents visit Newburyport Five Cents Savings Bank. Learn more about our services at http://www.newburyportbank.com/.
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