How to Get a Startup Business Loan
Attaining loan to startup a business is difficult, considering that lenders are often not willing to risk their money on new ventures. A new business generally requires more capital than the owner has up his sleeve but here he carefully needs to differentiate between his personal belongings and the money he needs to spend on his multi-million idea.
Therefore, the process of raising funds should start immediately after you have built a plan, and before you go to a bank for help. In a competitive world, one needs to be clear about his project, and how he intends to run it. Only then, he can convince others to chip in and raise enough capital to set up his business.
The primary task is to devise a strategy which you think will convince the lender, even before going to him. Do some brainstorming, sketch ideas in your mind and then prepare the necessary paperwork. Make sure that the idea is exclusively yours. Don’t waste any time and get a patent on it which will go a long way in proving the lender that you mean business and you are in this for the long haul.
As most projects fail after the initial years of their existence, so you need to build up a strong case. Asking money for just the early phases may reduce your worth in front of the lender so you must be outlining all the stages in the development process.
Separate business with personal credit as it will save you the trouble of having your own belongings under scrutiny if a problem arises. However, you may be required to give some sort of assurance, in the form of your personal asset but make sure that you don’t end up giving too much. Identification of other collateral pledges could also help you narrow down your risk, but ensure that doesn’t detract your lender.
Your friends and family members can also provide you help so take them into consideration. They may be more eager to give you money than you think. However, make sure the relationship is purely a business one.
Develop a clear understanding with your investors. Deliver a presentation if you need to as it will only enhance your reputation. Stay confident and make sure that you are professional in your approach. Also search for personnel who have taken a similar route when they started up a venture. These players will help you figure out potential investors.
Offer Company shares to the lenders to build a successful relationship as you may also require money later on in expanding your business. Be careful that you don’t offer too much.
Keep your investors happy by updating them with all the progress you have made. Strive to work as hard as you can and keep faith in yourself.