Small Business Loan Sources
by Lisa Phillips
Page 2 of 2
by Lisa Phillips
Page 2 of 2
| Copyright RebuildCreditScores 2010 All Rights Reserved |
Links
Friends and Family
Not surprisingly, more than 50% of all start-up costs for new entrepreneurs come from friends
and family. Friends and family desire to see loved ones succeed and follow their dreams. If your
credit is weak you are more likely to get a short-term loan from a friend or family member
because they evaluate your character, not your credit scores. This form of lending has so
evolved that there is now a website which will help you facilitate a loan between friends and
family. www.virginmoneyus.com
Borrow money from the Bank or Credit Union
If you are trying to borrow $50,000 then the bank would like to see you that you have invested
$15,000 of your own funds into your venture. I was recently approached by a new business start-
up seeking capital. The idea was unique and potentially very profitable. The business and
marketing plans were excellent. However, when I asked the business owner how much of their
own money they had invested in the business, to my surprise, the answer was zero.
The business owner stated they did not want to tie up their own money in the business. Well, as
a potential investor, I am not willing to invest in an idea that the business owner is unwilling to
invest in. Banks and lenders are the same way. If you don’t fully believe in the profitability of your
idea and put your own money behind it, no one else will. If you are going to approach a bank be
prepared to submit a good solid business plan along with your some of your own money to invest
in the business.
There are some banks that only require financial information and the process is much quicker.
Be prepared to have a good credit score when using this low documentation method.
Commercial Finance Companies
Commercial Finance Companies finance equipment and inventory purchases. Small businesses
involved in manufacturing and wholesaling can benefit from commercial finance companies
because of their collateral. Start-up businesses usually cannot qualify for these types of loans
because commercial finance loans tend to be highly collateralized.
These loans can be more expensive than a traditional bank business loan. For established
business these loans can be a good alternative to traditional banks as their credit criteria is less
stringent and commercial finance companies are willing to take on riskier loans. The assets used
to secure the loan must be immediately accessible and marketable.
Page: 1 2 Back
Not surprisingly, more than 50% of all start-up costs for new entrepreneurs come from friends
and family. Friends and family desire to see loved ones succeed and follow their dreams. If your
credit is weak you are more likely to get a short-term loan from a friend or family member
because they evaluate your character, not your credit scores. This form of lending has so
evolved that there is now a website which will help you facilitate a loan between friends and
family. www.virginmoneyus.com
Borrow money from the Bank or Credit Union
If you are trying to borrow $50,000 then the bank would like to see you that you have invested
$15,000 of your own funds into your venture. I was recently approached by a new business start-
up seeking capital. The idea was unique and potentially very profitable. The business and
marketing plans were excellent. However, when I asked the business owner how much of their
own money they had invested in the business, to my surprise, the answer was zero.
The business owner stated they did not want to tie up their own money in the business. Well, as
a potential investor, I am not willing to invest in an idea that the business owner is unwilling to
invest in. Banks and lenders are the same way. If you don’t fully believe in the profitability of your
idea and put your own money behind it, no one else will. If you are going to approach a bank be
prepared to submit a good solid business plan along with your some of your own money to invest
in the business.
There are some banks that only require financial information and the process is much quicker.
Be prepared to have a good credit score when using this low documentation method.
Commercial Finance Companies
Commercial Finance Companies finance equipment and inventory purchases. Small businesses
involved in manufacturing and wholesaling can benefit from commercial finance companies
because of their collateral. Start-up businesses usually cannot qualify for these types of loans
because commercial finance loans tend to be highly collateralized.
These loans can be more expensive than a traditional bank business loan. For established
business these loans can be a good alternative to traditional banks as their credit criteria is less
stringent and commercial finance companies are willing to take on riskier loans. The assets used
to secure the loan must be immediately accessible and marketable.
Page: 1 2 Back
Related Topics:
Social Lending
Peer to peer lending is not a new concept but the Internet has made it easier. This type of
lending matches borrowers directly with lenders, circumventing banks and other middle-men.
Peer to peer lending is a great alternative to traditional banks’ stringent automated credit scoring
system. With peer to peer lending, a typical loan could be funded by as many as 100 people,
thereby increasing the chances your loan will get funded. This type of loan is also known as
person-to-person lending or social lending. Read More
Partnerships
Seek a partner who has the funds to invest. You may have the knowledge but little money. A
partnership can be developed for a short period of time. You can construct an agreement to buy
that partner out at a later time.
Peer to peer lending is not a new concept but the Internet has made it easier. This type of
lending matches borrowers directly with lenders, circumventing banks and other middle-men.
Peer to peer lending is a great alternative to traditional banks’ stringent automated credit scoring
system. With peer to peer lending, a typical loan could be funded by as many as 100 people,
thereby increasing the chances your loan will get funded. This type of loan is also known as
person-to-person lending or social lending. Read More
Partnerships
Seek a partner who has the funds to invest. You may have the knowledge but little money. A
partnership can be developed for a short period of time. You can construct an agreement to buy
that partner out at a later time.
 |
 |
 |
 |
|
 |
|
 |
|
 |
|
 |
|
 |
 |
Recent Topics
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |