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Small Business Loans
Starting a business (search) requires money. You can't start a business without start-up capital, the total amount of money you need to open your doors for business, and to keep them open until sufficient revenue can be depended on. You're also going to need operating capital, the amount of money it takes to keep the business going. Operating capital includes expenses such as salaries, wages, rent, supplies, utilities, advertising, depreciation, and interest payments. Small business advisors recommend that start-up expenses include at least six months operating capital. So unless you are wealthy enough to finance your business on your own, you are going to need to look for a small business loan from outside sources.
One of the most important sources of a small business loan for your business may be the bank. However, there are some standard things to be aware of before you go in to ask for a loan.
Do you have a business plan (search)? That is usually the first question a potential lender will ask when you go to ask for a loan to start a small business. Unless you can answer, "Yes, and here it is," you will not get the loan.
Another factor will be your personal credit history (search). Before you go into a financial institution for a loan, know your credit history. If you are aware of and can explain any problems that may appear on your credit file, you can offer your bank a reasonable explanation.
If you live in the United States, an alternative to starting at your bank is a
government small business loan (search) or the U.S. Small Business Administration. Congress created the U.S. Small Business Administration (SBA) in 1953 to help America's entrepreneurs form successful small enterprises. This is a resource that provides professional up-to-date counselling, training and technical assistance in all aspects of small business management. Services are offered free of charge to anyone interested in beginning a small business for the first time, or improving or expanding an existing small business, who cannot afford the services of a private consultant. It also offers small business loans in the form of the 7(a) and 504 program.
The 7(a) is a guaranteed loan program that is designed to meet most of small business' financing needs. It offers both general financing and a series of specialized loans to small business in need of capital. The 504 program offers long term loans for land, building, as well as for the modernizing of existing facilities.
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