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Small Business Funding
If you have a great business idea or plan, or you would like to expand your existing business, don’t let a lack of funds stop you in your tracks. There is a wide variety of financing available for small businesses. Let’s take a look at the financing opportunities that small business entrepreneurs can take advantage of.
While the financing sources comprise diverse institutions, such as banks, government sources, venture capitalist and “angel” investors, it is useful to look at what all lenders, regardless of category, want when they loan money or invest in a business enterprise.
When you seek money for an already existing business, lenders will be interested to know about the history of your business; whether it has a track record of good management and good performance. Lenders will be keen to know whether you have the ability to repay a loan and will look at your present cash-flow to see whether it is sufficient to enable you to meet your current obligations as well as to take on extra debt.
Your credit history will also be under scrutiny. A good credit history will help you to get a loan. If you have had problems in the past, it is best to bring these to the attention of the lender yourself and explain how you have turned the situation around.
You can also bolster your chances of getting a loan by putting up collateral. This reduces the risk for the bank in case you default. And finally, if you can show that your own personal money is invested in your enterprise then lenders will have more confidence in the proposition.
Many small business loans are turned down due to poorly presented proposals, inadequate collateral, insufficient cash flow, and a lack of management experience.