Manta Small Biz Center


7 Ways to Get Small Business Financing

By George Page

Money is always an issue for small businesses, especially when starting out. However, the need for cash injections can continue long after you get that first dollar. Even same industry businesses can differ greatly, but they all have in common the need for money as well as the places they can go to get it. Here is a look at seven opportunities to get cash for your small business.

Small Business Loan

Probably the most known source for small business cash is the small business loan. This most often comes from a bank or the SBA; for startup capital or an expansion. The lender looking at your proposal needs to feel that you are a good investment and you can help them decide in your favor. Wherever you go to get the loan, there are several things you will need in order to give your business its best chance to get that loan.

Your business plan will tell the lender about your business and you. They will see how much planning you have done, your grasp of the industry, and how effective the loan will be.

A good cash flow projection tells the lender not only how you will pay them back, but when. Your best bet is to show hard, but honest numbers.

Your personal financial statement helps the lender to understand where you are coming from and where exactly your business is at. After all, you're tied to your business at the hip.

Bring past business tax returns if you have them. It will show the lender how your business has done and how you have managed money in the past.

Your credit rating is key for establishing trust. The lender may be giving money to your business, but they are forming a pact with you. A credit report will fill in the rest of the details of who they are about to trust with their money.

Microloans

From the SBA, the microloan program may be a perfect fit for your current financial needs. With a maximum of $35,000, a microloan can be less daunting to acquire, if not a little easier than a small business loan. The most common use for a microloan is short-term working capital and equipment purchases. Since most microloans require collateral of some kind, the best use is probably equipment, since the equipment can then be the collateral.

Supplier Credit

While this source of income may not work with all businesses, it is ideal for manufacturers and retailers. A supplier makes money by you buying their products, but if you can't first buy their products to make yours, they lose a sale. If you cannot be billed--net 30 days--or if it may take longer to receive your money, it is possible to work out a deal with your suppliers. An ideal situation is to procure credit out to sixty days. If that isn't possible, maybe they will take a percentage of the sales of the end product on top of the cost of the supplies. This temporary solution could generate higher interest than a loan, but in some situations, it could be your only choice.

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