How to Finance your Business

Dr Watson Goh By Dr Watson Goh, 14th May 2011 | Follow this author | RSS Feed | Short URL http://nut.bz/22.kgdre/
Posted in Wikinut>Money>Loans

What and how to ask the bank for a business loan. Details are explained below.

Looking For Business Loan

To start your business, money is the main requirement. Without money neither you can start nor maintain a business. Now a day generally, business men depend on bank for their finance. But you should not depend on bank because it needs operating history.

There are also other choices are available. These are as follows.

* The main source of your finance is your personal saving. It is one of the best sources for you.
* You can depend on the small business Administration loan guarantee programs for your business.
* You should try to find any finance with good credit rating.
* You can also depend on FICO finance. It scores from 365 to 850. It requires your credit payment history, number of open
accounts, overall credit balances and public records such as judgments and liens.

FICO below 680 will cause a lender to be careful. To get your own score is to enter "FICO" into a search engine.

The cash flow control form makes clear your entire source of earnings and expenses. Some of your expenditure may contain buying materials and inventory, paying payroll and rent, buying gear and furniture, getting a computer, buying the business etc.

Unsecured and secured Loans

Both unsecured and secured loans are available. One of the examples of unsecured loan is credit card but the majority of small business loans are secured by both the personal property and property of your business.

There are various unsecured business exist such as unsecured lines of credit, friends or relatives etc. Some of the secured loans are computer lease, home mortgage, car loan or lease and small business administration loan etc.

Collateral

Before giving loan, bank searches for certain things. These are as follows.

The time period of remaining in your business is the important factor for the bank. Generally bank needs minimum three years but the time period of others is less severe.

Other one is the extent of the business. There is also limitation in the amount of the loan. It is directly proportional to the source you have.

Business Loans

If you want to do the business loan, you should have the knowledge about the requirements. The general things are Business tax returns, business plan with financial statement, Personal financial statements and Personal tax returns etc.

You should have much more knowledge about your business so that you can answer of all type of questions about your business.

Tips of repayment

* Be well dressed and well organised in all the meetings of bank. It will produce a positive effect.
* A majority of lenders including Small Business Administration need your business plan.
* The lender should know about the condition of your business.

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Comments

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2nd Jul 2012 (#)

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author avatar devinbutler30
2nd Jul 2012 (#)

Thanks for sharing this information with us. Business loans are really good thing for businessmen. Many businessmen are having problem to run their business with small financial backup, and they really prefer these kinds of business loans.
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