Valuable Pointers On Small Business Financing Strategies

May 1, 2010

The past few years have been momentous. No longer can we consider ourselves to be in safe and solid occupations, as many of us have had to really focus on where we are in life, quite suddenly. When you come to a certain age, it’s not much fun to be faced with the prospect of having to look for a new job, courtesy of this most severe recession. This type of experience can be so traumatic that it creates a lasting impression and makes you vow that you will never put yourself through this drama again. It is at times like these that you really need to consider striking out on your own and establishing your own business, rather than letting somebody else determine the fate of you and your family.

If you really sit down and think about it, we all have certain ideas inside us and we should reflect upon our abilities and talents to see how we could best use them when we become self-employed. Why not use some of your skills to provide much-needed services and products for others and as you journey down the road of entrepreneurialism, benefit from the peace of mind that comes with it. You might be saying to yourself, an idea is all well and good, but what about that thorny problem of small business financing? A new business owner can always try going it alone with little or no up front, or ongoing expense, but realistically most businesses will need some sort of financing to get off the ground. For some this hurdle of finding small business financing could even be something they consider too difficult to overcome.

Due to all the dramas of recent years, you could be forgiven for thinking that an approach to a bank would be a complete waste of time and as a consequence most small businesses would find great difficulty in borrowing money. It certainly doesn’t have to be this way. By starting off on a solid footing and by preparing your case adequately, small business financing options are available to you, to help you float your dream.

You may well have heard of SBA loans and know that, even though you would need some decent credit to start off, you don’t have to have perfect scores, a situation that very many people find themselves in these days. SBA loans are available for up to $5 million in value and it’s certainly possible that you will only be required to put between 10 and 20% of your own money into the pot. Remember that this program is a government-funded concept, and is essentially a guarantor of loans made by other parties. Basically the government will guarantee up to 90% of qualifying loans made this way.

If finding any down payment at all is an issue, financing for your small business could come in the form of an unsecured loan. Unsecured loans could be an option if you require less than $150,000, and are in possession of a good credit score. You won’t have to guarantee the loan against your home or other significant assets, and capital may be available to you in as little as seven days. These cases rely entirely on a first-class credit history, good credit standing and an appropriate credit utilization rate.

Did you know that you can invest up to 100% of your retirement funds into a new business venture — without paying taxes or early distribution penalties? Here, you should have more than $50,000 in retirement funds available and should seriously consider this case. In this case you would be investing in yourself, so you wouldn’t have to worry about loan payments or anything like that. In addition, it is also possible to combine this form of small business financing with other sources of funding. This is the way that you could move forward, if you’re finding it difficult to come up with the 20% equity needed to qualify for a SBA loan.

If your business requires significant asset purchases, you might consider equipment leasing. Equipment leases often come with extremely favorable rates, however, they can only be used for equipment purchases or refinancing.

In short, there are many small business financing and funding opportunities out there to help you achieve your dream, you just might be looking in the wrong place.

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