Business BLOG

In the midst of the global economic crisis, many small businesses are on the brink of closing down if not enough capital infusion is found. It is now even more difficult to get small business loans from banks, though. Ironically, the exact reasons why small businesses need such small business loans – the fact that business has slowed down and profitability has plummeted – are the same reasons why banks turn them down for loans. Small businesses now have to be more resourceful in finding alternatives to small business loans. Government Grants and Contracts Instead of Small Business LoansThe American Recovery and Reinvestment Act signed by President Obama in February 2009 caused the pumping of billions of dollars for the revitalization of the economy. Because of it, there are plenty of government grants and contracts available to small businesses. These can be alternatives to small business loans. But how can small businesses avail of the stimulus program?The Association of Procurement Technical Assistance Centers (APTAC) has the responsibility for helping small businesses obtain and perform federal, state and local government contracts. It has Procurement Technical Assistance Centers (PTAC) throughout the country, ready to help small business owners to get registered and find opportunities in the area of government grants and contracts. Counselors assist small businesses in filling out bids, proposals and quotations. The PTAC holds seminars teaching small business owners all the ins and outs of government legalese, including acronyms and registries. A one-day seminar with PTAC covers what small business owners may take months to learn on their own. The PTAC then helps small businesses with Central Contractor Registration (CCR), a requirement for doing business with the federal government. This registration can be so complicated that some companies take two days to do it when the PTAC counselor can help them get through it in 15 minutes. Local PTACs will be of help in acquiring state and municipal contracts. Other resources that small business owners should consult include the Small Business Administration (SBA) which also coordinates with the APTAC; the General Services Administration (GSA) which acts as the government’s purchasing department and provides information on becoming an approved vendor; the Federal Business Opportunities website (fbo. gov) where federal contract opportunities currently available are posted; and the Small Business Innovation Research website (sbir. gov) where grant and funded research opportunities for small businesses are listed. Cash Advances from Credit Card Services Instead of Small Business LoansAnother alternative to small business loans are cash advances from credit card services. This option is much easier than winning government grants and contracts. Most small businesses are already availing of credit card services that enable them to accept payments by credit cards or debit cards. This is practically a requirement to doing business these days, with people hardly paying cash for goods and services. Many small business owners do not know that they could avail of cash advances from these credit card services, though, and that such advances can actually equal small business loans. The amount that a small business can borrow is based on its average monthly income from credit card sales. This is so because the cash advance does not require collateral and future sales receivables from credit cards stand as the collateral. Payment will also be done through automatic deductions from those future credit card sales. There will be no set monthly amortizations. Instead, a certain percentage of the sales will be allotted as payment. The small business owner, therefore, need not worry over where to find cash for loan payments. Cash advances from credit card services are the best bet of small business owners as alternatives to small business loans.

Starting your own business is exciting, but also often a little intimidating.   Perhaps the most intimidating part is trying to acquire the financing you will need to successfully start your business.   Most new businesses come with substantial startup costs, far more than what business owners can come up with out-of-pocket.   Therefore, getting financed is one of the crucial steps to starting your own business.
Unfortunately, not every aspiring business owner is able to find financing.   Lenders and investors tend to want to see first that the business — and its owner — has a good likelihood of success before they back it financially.   Remember, a lender’s primary concern is making sure they’ll be able to get their money back again — as well as the interest accrued.   If you can convince a lender of that, your chances of getting a startup business loan are pretty good.
Here are some tips for how to start your own business the right way — with sufficient funding.
Know the Industry
Experience in your business’s industry is extremely important.   Lenders and investors will want to know your background in the industry, because if you know the industry well you have a much greater chance for success.   If you don’t yet have experience in the industry, you should consider taking classes or working for a business similar to the one you want to start.   You can also form a partnership with someone with the proper experience, form a Board of Directors to advise your company, or hire someone with the required experience as one of your top managers.
Clean Up Your Credit
Many startup business owners mistakenly assume that since they are financing a business, their personal credit does not come into play.   Quite the opposite is true.   Since your business is a startup, it has no track record, of either income or paying bills on time.   As the sole proprietor, it will be up to you to qualify for — and guarantee — the loans your business is given.
In order to put your best food forward, it is important to start this process far in advance.   Cleaning up your credit can take several weeks or months.   You will need to first pull your credit report from each of the three credit reporting agencies, as major differences can exist between what each one reports — particularly if there are mistakes.   Carefully go over each credit report, and contest mistakes with both the credit reporting agency and, if necessary, the creditor.   Most credit bureaus offer online forms for disputes, which make cleaning up your credit report easier than ever.
Finally, if there are accurate but potentially negative items on your credit report, you may be able to negotiate with your creditors to remove the items — particularly if your track record with them is otherwise good.   Taking these steps ensures that you will make the best possible impression when applying for a startup business loan.
Have Some Sort of Collateral
Just as you will need good personal credit in order to acquire financing for your business, you will also need to be able to provide some sort of collateral.   If you are looking for a loan to help you start your own business, chances are you do not have any business property yet — although if you do, that would be the logical first choice.   Without business property as collateral, however, you will need to use your personal property to guarantee the loan.   Examples of property that could serve as collateral are your home or commercial real estate (minus what is still owed on the mortgage), a work truck or other heavy equipment, and office furnit
Write a Business Plan
While you are going through the lengthy process of cleaning up your credit is the perfect time to thoroughly research your business venture.   Starting your own turnkey business is more than just getting a business loan and hanging up your shingle.   You will need to know where the market stands right now, where it is projected to go, and how your business will fit in.   You will also need to know who your target customers are, and how you will reach them.   There are many different factors that play into how successful your business is, and you want to be sure to fully understand all of this before you get started.
Once you have done this research, you will put it together into a business plan.   This is important because the business plan is how lenders and investors decide whether your startup business is worth funding.   A well-researched, well-written business plan demonstrates that you know your market and therefore have a pretty good chance of starting a successful business.
Starting Your Own Business with the Proper Funding
One of the most important parts of launching a business is getting enough funding to start off on the right foot.   Most startup businesses rack up considerable costs, and trying to cut corners on some of these can be disastrous to your business’s chances for success.   Most small businesses fail within the first two years, usually as a result of insufficient funding and poor decision making along the way.   Taking the time to find the proper funding for your business is imperative for not only supporting a successful launch, but also for making your business more likely to succeed.