Financing your business with a loan

If you need a finance loan business to support you either at the start or to grow your business, you’ll be wondering about your options.

Of course the most popular source of finance is yourself. Your own assets. However, we’re going to give you an overview of the different sources available, but before we start a quick word of advice.

Before you lend anything, focus on reducing your loan requirements. At WDTD we have a variety of tools to help you do this and save you money. So let’s look at your options.

Before we start, we’re assuming that you have a well prepared business plan. If you don’t, you should stop reading this and get that part done as it will reveal just how much cash you really need. Our free 35 page business start up guide can help you with this.

So what are your options when looking at finance loan business.

1) Family and Friends

By far the most popular source of funding after your own pockets. make sure you’re 100% honest about the upside and the risks and also document everything including the amount loaned, the terms of payback and any additional promises you have made. You need to do this in case things don’t work out.

2) Line of Credit

A line of credit is essentially an agreement between you and your bank that they are prepared to advance you $x whenever you need it. It’s based on your income and credit worthiness. Interest rates are variable as you take the advances, but you choose when you need the cash.

3) Loan from a bank

You’ll most likely succeed with a bank where you already have a relationship. It’s well documented that banks are currently very slow in lending money. Do your homework and compare the terms of local and national banks. A well prepared plan and presentation is a must. banks are not lending as much at the moment, but it’s how they make money, after all.

4) Government sponsored organization

Depending on the business you are in, if you’re a minority and many other factors you may be able to secure a loan from the government. one of the main challenges here is navigating through what seems like endless administration.

Be clear about the difference between a loan and an investment.

A loan is something you are committing to pay back along with interest. It’s usually secured againsy an asset of yours, often a house.

An investment is wher you seel a part of your company for cash. Angelique and I have worked with Angel and Venture investors. They will give you  cash in exchange for part ownership. However, these tend to be for large business ideas with major potential and upside.

It’s a tough time for finance loan business. With a great plan and the right support it is not impossible. Good luck!