Small businesses are one of the main driving forces of the American economy. In fact, there are between 25 and 27 million small businesses operating right now in the United States. Taken together, they are responsible for about 60 to 80% of all jobs, Banks supply the working capital loans for small business loans but these loans are backed by the Small Business Administration (SBA). The SBA is tasked with helping entrepreneurs follow their dreams of opening new businesses.
If you are interested in getting help with working capital loans for small business that you want to start. these tip s can help make your dream become a reality.
Tips for securing working capital loans for small business:
- Meet the criteria banks set for small business loans. Banks want to see that your business model is solid. Your business also has to be eligible. Typically businesses that lend money, are involved in speculating or have anything that resembles a pyramid scheme are not eligible for SBA packed loans. They also only lend money to individuals who they think will be able to repay the loan. They will evaluate your (and your partner’s) character, credit and character. The SBA generally does not underwrite loans for businesses that the founder(s) has not invested some of their own money. They like to see that you “have skin in the game.”
- Bring the right back up materials. You will need to supply your personal and business credit history. You also need to provide them with any financial statements you have for other businesses you have started, a thorough and detailed business plan for your new venture, any cash flow projections you have made for at least one year and personal guarantees from anyone involved in starting the business.
- Each small business loan is different. You may wonder what the typical small business loan looks like. When securing working capital loans for small business, you should know that these ventures run the gamut from one person start ups to companies with more than 100 workers. Accordingly, there is no “one size fits” all when it comes to loans. The banking industry considers small business loans to run from about $130,000 to $140,000. The most they will lend for these ventures is $250,000. The SBA also finances what it calls “micro loans,” which can be as small as $5,000. The largest loan the SBA will guarantee is $5 million.
You can make your life easier by beingandnbsp;selective about the banks you approach for loans.
- Try credit unions. If you belong to a credit union, you should start there. Even if you are not a member credit unions are more willing to provide working capital loans for small business because one of their goals is to invest in the local community. If you can show that your business will benefit the area the credit union serves, you will have a better chance at getting a loan from one.
- Go to small banks next. Larger, multi-national banks do sometimes back smaller ventures but it is more challenging. Start with smaller lending institutions in your area.
Try your bank.
- If you have maintained a checking and/or saving account with the same financial institution for a long time, you should start with them. They know you and are the most likely to lend you money for your new business.
There are organizations that can help you. The SBA has people on staff whose whole raison d’etre is to help entrepreneurs get the working capital loans for small business they need to build a successful business. There may also be resources available to you at the state and local level. If you are not sure where to ask, contact the staffs of your United States senators and congressperson. They have staff who can help. If you live in a city, talk to your representatives in your city government. Talk to the people who represent you on the state level. It is their job to help people like to bring business to the district.
Starting a new business takes a lot of work. Take advantage of all of the resources you have available and you will increase your chances for success,