Maintaining a small business is never easy. Despite the amazing advantages owning your own business can give you, keeping it afloat requires patience, resilience, and a lot of creativity. One of the areas where creativity is something that you will absolutely need is financing. The great irony about starting a business to make money is that it is really hard to do it if you do not already have money in the first place. After all, there are so many things that you have to pay for from employees, inventory, taxes, maintenance, leases, and more.
If you are familiar with these struggles you have probably considered borrowing money to help your business stay afloat. If you haven't gone through the arduous process of doing so yet, here is what you need to know.
The good thing is that to borrow money for your small business is not as hard as you may think it is. You are probably wondering how you could possibly do so if you yourself have bad credit and you are struggling to get a personal loan for yourself.
Keep in mind that your business is a separate legal entity from the owners and partners that are managing it. If you have applied for an EIN and you have at least 2 years of balance sheets in handy, your business will have creditworthiness that is not exactly directly tied to your own.
Of course, securing a loan for a small business presents a lot of big challenges as well. Not least among these challenges is the fact that as a startup, you may not have the required business history to be able to prove that you are qualified for the loan. This is very problematic for many business owners because the start of their business endeavor is usually when they need the funds the most. The fact that it is at this juncture that they find it so hard to get the money makes it a real struggle to stay competitive.
It is not all bad news though, because even though a lot of startups would not be able to qualify for traditional business loans there are still plenty of options available. There are startup loans out there that gauge the viability of the idea of the company when deciding to grant the loan or not. Furthermore, there are also several business lines of credit that the owners can apply for. The great thing about lines of credit is that you borrow only what you need as these tend to work like credit cards for companies.
When choosing what the best option for funding is for your company, always remember to study the products that you are going for and also the company that is offering them. Some companies offer interest rates that are lower than others, some offer smaller origination fees if any at all, and some are more than willing to negotiate the terms of your loan or line of credit if you can prove that you have an offer from somewhere else. Financial institutions are not run purely on algorithms so they are more flexible than you think.
So that is a look on what your journey of finding adequate funding for your company will be like. Do not be intimidated by the process because all it takes is dedication and hard work at the end of the day. If you are able to get yourself well acquainted with how these products work and also refine your negotiation skills, you will be able to close that funding deal in no time.