How do you get a small business loan

how do you get a small business loan

Answers

You stand a greater chance of getting a government-guaranteed loan through the Small Business Administration http://www.sba.gov/financing than a government grant. Read the SBA Financing page to learn about criteria needed for borrowing

SBA will consider the following factors:

- A business plan explaining what the business is

- Your background and experience in the business -- in my experience, this is KEY in the eyes of the bank because they want to make sure that you know what you are doing and that you can make the business work. If you don't have any experience with the business, have someone on board that knows the business to give banks assurance that someone will guide you

- Your credit factors because it shows your dependability and how well you handle credit. They will do a credit check on you and poor credit history may be frowned upon, or even reason for the disapproval of your loan application

- Your collateral. Banks, even SBA guaranteed loans, want the borrower to show collateral. They want to be guaranteed that somewhere somehow they can get payment from you

- Condition or terms of loans. Banks would want to know three important things: "How much money are you requesting? What will it be used for? and For how long will it be needed?" Banks oftentimes prefer to approve loans for items

that can be identified, has lasting value, and can be repossessed and sold if things fail.

Aside from banks I suggest you consider microloan providers. They typically fund up to $30K Read about the SBA Microloan Program http://www.sba.gov/financing/sbaloan/mic.

It is hard to find grants to start a business. Unlike the myths that some perpetuate, federal government and even private foundations hardly give grant money for a for-profit business. And yes, grants mean PAPERWORK - lots and lots of it, that is why a cottage industry of grant writers was born.

Nonetheless, you can go to the Catalog of Federal Domestic Assistance (CFDA) http://www.cfda.gov and Grants.gov http://www.grants.gov - these are two sites created by the federal government to provide transparency and information on grants. Browse through the listings and see if you can find any grant that would support a for-profit venture.

Even SBA does NOT give out grants. From the SBA website http://www.sba.gov/mostrequesteditems/CON_FAQ2.html

"The U.S. Small Business Administration does not offer grants to start or expand small businesses, although it does offer a wide variety of loan programs. (See http://www.sba.gov/financing for more information) While SBA does offer some grant programs, these are generally designed to expand and enhance organizations that provide small business management, technical, or financial assistance. These grants generally support non-profit organizations, intermediary lending institutions, and state and local governments."

imisidro · 9 years ago

Source: answers.yahoo.com

Category: Credit

Similar articles: