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According to Sabrina Parsons, CEO of Palo Alto Software, which makes software tools to help the small business track and their finances, but to start a business you are afraid you can’t get financing. Before the Financial crisis, credit may not be as plentiful as it was but loans are still out there for small business owners who do their homework. Software tools to help small business track their finances and if you want to launch, expand or help finance your business try these following steps:
1. Take a test Drive.
For applying to a small business loan, you can go through the considerable bureaucratic hassle of applying to get a good read as to whether you’ll get one, Parsons says. Visit one of the SBA’s Small Business Development Centers for free guidance as to how best to present your information and whether you’re likely to get a loan.
2. Prepare a business plan and financial documents.
Parsons says that it will be tougher to get a loan if your business hasn’t opened its doors yet and if your business is up and running even in a small way, prepare some cash flow sheets that show you understand where the moneys is coming from. In the past if you have run a successful business that information will help you too in wither way to take and do at time to prepare a business plan. “Not some but 55 page thing is something that will show you have good understanding of your business and market, a high level strategy and a financial projection.” But ultimately she says, a human being will make the yes or no decision on your loan and without which solid documentation the answer will likely to be no, even if everything else looks good.
3. Get your personal finances in order.
Parsons notes that the personal background is often a problem is because the bank is betting on you just as it would be for a personal loan so your past credit performance matter. It is now the time to pull your free credit reports from the website www.annualcreditreport.com. If there is negative information which are delinquencies or other negative that doesn’t belong dispute them and try to pay off any outstanding loans, including credit cards. If you face problem is that you have not used much credit card, which can also give you a low credit score and take out credit card or two and use it once a month or so, and pay the bill promptly. You can also bring a better business partner with better credit that yours is the other option you can try for.
4. Try a community Bank.
Community banks are better than the big commercial banks, said by Parsons. For one of the thing, loan officers are likely to have more decision-making power and are less firmly bound by algorithms than they would be in a large bank. As said not all the community banks are equal and you want one that is actively pursuing small business customers. You can check you the banks marketing materials and the financial information on its website to get a clue. But “if only 2 percent of their customers are small a business that is probably won’t work for you as told by Parsons.
5. Consider a line of Credit.
With the loan you also get the lump sum from the banks which are usually for a specific purpose such as opening a new store or expanding an existing one. From the increased profits you can pay it back over time at your new or larger locations. A line of credit is more like a credit card which is used when you need it, for instance if you get a large order from B2B customers and need to buy materials but won’t have cash till 30 days after you deliver the finished product. For keeping your business running day to day and at easier to obtain as well a line of credit is better said by Parsons.
6. Don’t wait till you need it.
At the old adage about how the banks only lend to those who don’t need their money has some truth to it, if u come more to the point wait till you can’t make payroll it’ll be difficult for the bank to help you since they generally cant lend to companies at risk of going bankrupt or ceasing operations. Instead of paying close attention to your projections so that you’ll know ahead of time if you’re going to hit a cash crunch. “If you tell bank that the Business is going good, but I’m collecting every 60 days instead of every 30 days than they are more likely to extend your credit,” said by Parsons.
Many small business owners wait too long than “Sixty percent of small businesses that fail are profitable when it is fail” which she adds. “It is just that they don’t have the cash flow.”
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