Starting a small business is the easy part but keeping it afloat takes a village.
It’s like taking care of a baby who has endless needs. You also need to wear many hats and must be a jack of all trades. Somehow, you need to find a reason to keep optimistic against all the odds.
As a small business owner, you are a large part of your country’s economy with all the responsibilities that come with that. To top it all, you need to market your business and pay the bills.
On the brighter side of things, as an entrepreneur, you are your own boss, you have less red lines, and you can take your business to whichever direction you decide. You are (somewhat) unlimited.
The #1 Hurdle for a Small Business Funding
Funding is one of the biggest hurdles that small business owners encounter, eventually. Maintaining a business require spending a lot of money, at least, that’s how most business models work.
Think about it; any business needs capital to operate efficiently. Any profitable business to generate revenue. When a company lack funds, the manager usually go for business loans. It could be for some reasons:
- Purchasing inventory.
- Purchasing equipment.
- Day-to-day expenses.
- Refinancing or paying other debts.
Common Small Business Loans Sources
A good idea is not enough as you probably know by now. No matter how good your business ideas you need to put them into work. When looking for fast business funding, most entrepreneurs turn to friends and family or big banks.
There’s a little problem with that. Friends and family often set unrealistic expectations and lose faith quickly.
Not to say that all friends and family are not supportive, but in the business world, you need to think long term. That is something that friends and relatives don’t always understand.
On the other hand, to borrow money from big banks, you need to fill heaps of paperwork and go through a rigorous filtering process.
Unless you have a few years of experience and the papers to prove it, big banks will hardly give you any attention.
Small Business Funding takes many forms. As with any other issue in life and business, there is a middle ground. For example, there are business finance companies that offer unsecured business loans for small business owners.
Getting Unsecured Business Finance
An unsecured business loan means exactly that. It is not against any property or assets. It is tailored for small business owners who are just starting out or still getting their business off the ground.
Because business owners have no collateral or assets, the risk is greater for the lender, so this type of business loans has a high-interest rate. Despite the fact, they are one of the best business financing options. Think of it as a way of growing a business rather than another debt.
In a nutshell, an unsecured business loan is compared to the cash flow of any given business. So it is more suitable for businesses that don’t need equipment or assets to generate revenue. It also doesn’t have to follow traditional loans with specified dates term and fixed interest rate.
The most important thing to remember about unsecured business finance is that although you still need to meet strict business loan requirements, it is much more flexible than big banks loans.
Know your why
Why do you need a small business loan now? This is probably the first question the lender will ask. Therefore, it’s better to answer it for yourself before going out to ask for a loan. It could be for any reason mentioned above.
Put yourself in the lender’s shoes and understand why they should lend you money.
Research all types of business loans
There are many types of business loans, not all of them will work for you. If it’s your first year doing business, there’s a dim chance that you can any loans. Most loans will require an operating system with a stable cash flow.
However, you can try business credit cards, borrowing from friends and family, crowdfunding, personal loans or a microloan from a nonprofit lender.
The older your business, the better chance you have with big banks loans, term loans, business lines of credit and invoice factoring.
In your research, go as dark as you can to determine the right type of lender.
Know your business
Vital Intel about your business include:
- Credit score.
- The age of your business.
- Your minimum annual revenue.
- Cash flow.
These are the major factors that will determine if you get the loan or not. These are the business metrics that your lender is most concerned about, and you should too.
Determining the exact amount of money will also be crucial when you are applying for a business loan.
Put it all together
After comparing your options and assessing your financial situation, it is time to apply for the loan.
Please note; you cannot apply for multiple business loans without it affecting your credit score. Therefore, you need to make sure whom you deal with will get the job done the first time.
Some of the documents you’ll need:
- Business and personal tax returns
- Business and personal bank statements
- Business financial statements
- Business legal documents (e.g., articles of incorporation, commercial lease, franchise agreement)
Facts about Business Loans
So, know what you are getting into. Here are some quick “facts” about small business loans:
- The Small Business Association of Australia (SBAA) is one of the most trusted, reliable small business funding sources to entrepreneurs, but it doesn’t provide business loans.
- The bank is not the only small business funding option for small business owners, there are tons of other options.
- You don’t always need a business plan when you are applying for a small business loan.
- The size of the loan has nothing to do with accepting or refusing it. You should worry about how you will pay the premiums.
- Loans are a sign of a healthy business, and it doesn’t necessarily reflect that your business is in trouble.
- Even if you have a bad credit, you can still get a business loan.
- Business loans doesn’t take forever to be approved, contrary to popular belief.
- Everyone applies for non-bank loans because they are faster. Even established businesses.
Growing a business is not always easy. It is not for everyone.
If you have what it takes, you can make your business flourish even in the worst economic circumstances. It takes persistence, determination, and a dash of optimism.
Building and growing a business from the ground up is something only a few people can see through. Ideas are a dime a dozen, and it’s always harder than you initially thought.
Funding is always a big hurdle for most entrepreneurs starting their journey, but with the help of business loans, they have many options to survive.
The first few years are the toughest, but it gets easier as your business evolves, this is not a promise. But at least you eventually get the experience to navigate through the misty world of business finance.
Remember leaning on trusted friends and family when things get unbearable could be a quick option in times of cashflow problems but if this fails then contact Business Loans Australia for all your fast small business funding options.
If family don’t come to the rescue Business Loans Australia will!