Posted on: 21 May 2019
While it's possible to get an SBA loan for a brand new business, it can be a challenge. If you're interested in starting a business and don't want to put the funds up yourself, there are a few things that you need to know.
There Are Loans Out for Starter Businesses
There are loan programs that are specifically targeted towards new businesses. However, they're difficult to get. In order to get them you usually need to secure them with the value of property. That means you may need to put forth your house as collateral.
If you're willing to do this you'll still need to have a comprehensive business plan. The better your business plan, the more likely to acquire funding. As a part of the business plan, you should cover your risks and potential for failure: this is as important as your potential for success.
Sometimes It's Better to Start Small
If you don't want to mortgage your home or use it as collateral, it may be better to start a business at a smaller scale. If the business can be established and earn money over a few years on a smaller scale, it's likely to qualify for more significant small business loans. Ramping up slowly also allows a company to test the market, though understandably it also means there's less profit.
Improving Your Chances for a Loan
Meeting with a business adviser is a good place to start. The SBA provides classes for new business owners, which are often a requirement for acquiring a loan. Furthermore, the SBA will often give advice to new business owners and tell them what they need to do to qualify for a loan in the future. The first stop for most small business owners should be to contact the SBA and ask about the requirements for their loan products.
Getting Private Loans and Private Funding
In addition to SBA loans, there are also private loans and the potential of getting investors. Private funding is often the most accessible option for a new business, but it also conveys some level of personal risk, as you will often need to personally guarantee these types of loans.
There are many options for procuring funding for a small business. If you can't get a loan for the business itself, you may be able to get a loan for the equipment that you want. For more information about the benefits of an SBA loan rather than private loans or funding, you can contact your local chapter of the SBA.Share