Ravi Chandran
Even when you need money urgently, the best advise would be to separate family from personal.
By: Hitesh Khan/
There are some businesses you can start with a very small capital outlay. You can put in your time and a little bit of money and give it a go. But many others—those with large physical presences like retail stores or restaurants, those that have to stock inventory before they can begin to sell it—require a stash of cash in order to get up and running.
You may also need money for marketing, advertising, public relations and shipping. And one of the worst mistakes businesses make is trying to run on such a short shoestring budget that they don’t give themselves a chance at success.
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If you need money, here are some resources that will help you determine what kind of funding you need to acquire.
Yes, I need money, but how much?
As you get ready to launch your business, estimate how much money you will need to keep your business running for 12 to 18 months, or however long you believe it will take to give it a shot at success. Then figure out how much you can provide from your own stash – your savings, your family and friends, or cash flow from a current job. The difference between what you need and what you have is the amount you’ll need to raise from other sources.
If you need money, carefully consider personal loans
Many people opt for personal loans in the forms of credit cards and home equity loans and lines of credit in order to fund their start-ups. They do this for two reasons – either they can’t get actual business funding (or they don’t think they can) or they believe this sort of funding will be cheaper.
If you can get a great deal on a home equity loan, it may seems like a very inexpensive way to go. The problem is you’re putting your home on the line. Likewise, if you charge up your credit cards to start a new business, realise that you are putting your personal credit score and family’s financial health at risk. You should try to keep the business and the personal separate.
Get some free advice when you need money
Free advice is useful to help you wade through the challenges of getting start-up financing. One of the persons you should talk to to get free advise is the independent loan specialist. The documents required to get the financing you need could be daunting. The documents required will be determined by the type and amount of credit you need. It may be as simple as a single-page application for a business credit card, or it may require business and personal tax returns, and financial statements.
It is good to understand the legal jargon in that stack of papers you will have to sign before the small business loan is disbursed. A close look at those documents now could save you a lot of headaches later. Be mindful that your bargaining power over your small business loan vanishes completely after you’ve signed the documents.
The small business loan documents could be a bit overwhelming, but with the help of a lawyer of an independent loan specialist, you can get a full understanding of what the legalese means. In fact, many independent loan specialist encourage loan applicants to understand the loan documents before they even complete a formal application for a loan.
Still want to ask family and friends?
The Bank of Mom and Dad may seem to be the best place to go to for the cash you need, especially if you need it in a hurry. But borrowing from relatives (even close ones) or friends can be a very quick way to put a hitch in an otherwise solid relationship.
So, when you borrow money from your nearest and dearest, do it with paperwork, a payment schedule and a plan to follow if and when you can’t make a payment. Interest is optional. Your lenders can charge it if they chose to, but many do not.
One best small business loan tips most people won’t give you is to not wait until you are desperate to ask for money. This is not a good foundation for a successful loan application. The bank wants to feel secure in its decision. It does not want to hear that your business needs the loan to survive; it wants to hear that your business needs the loan to grow.
How to Secure Small Business Loan Quickly
If you are searching for a small business loan, the loan consultants at iCompareLoan can set you up on a path that can get you a it in a quick and seamless manner. Our loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. Find out money saving tips here.
Our Affordability Tools help you make better property buying decisions. iCompareLoan Calculators help you ascertain the fair value of a property and find properties below market value in Singapore.
To find out more about Peer to peer lending versus that of SME loans so as to make an informed decision: SME Loans or Peer-to-peer (P2P) Lending – What is the difference?
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