Most people opt for a New business loan when they are expanding their business either by opening new locations, entering new territories, or otherwise increasing the scope of current operations.
Whatever maybe the case, you need funding whether you are small business seeking to become big or a big one seeking to cement your position, or wanting to become even bigger. If your business is even reasonably successful, lenders will line up to offer you funds to let you do more of the same.
While capital expansion is probably the most common reason for applying for a business loan, here are a few other ways businesses, small or big use the extra funding:
• improve facilities and conduct renovations
• invest in major equipment
• boost working capital
• build up inventory
Often, even businesses that have enough capital for an expansion or equipment investment opt for a New business loan instead. This leaves them with the operating cash to cover unexpected expenses, while the new income generated by the purchase or expansion covers the cost of the loan.
Avenues of Small Business Funding
Self
You are the first source of money. If your planned operation is modest enough, you may be able to supply all the capital yourself. But if you are doing good and have foreseeable bright future, it is better to go for loans as you don't want to tie up too much of your own funds and it's good to get the experience of managing borrowed money.
Friends and relatives
After you have put up some of your own money, friends, acquaintances, and relatives are probably the source to consider next. About 13 percent of entrepreneurs obtain start-up capital from this source.
When you borrow from people you know, everything starts out on a friendly basis. But beware that once the loan is extended, the friendly atmosphere may dissolve. Money can do strange things to people. For example, you may find that your friend, who lent you money, keeps calling up every day or so to see how things are going and to pester you with unwanted advice.
Working partner
One solution to the money problem is to take on a working partner who makes an investment and shares the running of the company with you. The capital and skills of two people are combined. In an ideal arrangement the partners' qualities complement each other.
One good combination is to team up a person having expertise in the type of business with a person who can infuse capital. Another good combination would be a person with administrative skills teaming up with one who has strong operational know-how.
If you're not the kind of person who can do it all, face the fact honestly. Identify your own strengths and weaknesses, utilize your strengths and find a partner who can fill in the gaps.
Keep in mind, partners sometimes may fight and argue. This is healthy, provided the discussion stems from different experiences, knowledge, temperament, and ideas about the business, rather than personal reasons.
Although a partnership is easy to set up, its better to have an attorney prepare a contract spelling out the rights and responsibilities of those involved.
Commercial banks
If you are launching a new business, chances are good that there is a commercial bank ready to invest in your future. However, remember most of the bank funding goes to small businesses that are already in operation and have an established track record of profitability.
Source : http://www.website-articles.net
Whatever maybe the case, you need funding whether you are small business seeking to become big or a big one seeking to cement your position, or wanting to become even bigger. If your business is even reasonably successful, lenders will line up to offer you funds to let you do more of the same.
While capital expansion is probably the most common reason for applying for a business loan, here are a few other ways businesses, small or big use the extra funding:
• improve facilities and conduct renovations
• invest in major equipment
• boost working capital
• build up inventory
Often, even businesses that have enough capital for an expansion or equipment investment opt for a New business loan instead. This leaves them with the operating cash to cover unexpected expenses, while the new income generated by the purchase or expansion covers the cost of the loan.
Avenues of Small Business Funding
Self
You are the first source of money. If your planned operation is modest enough, you may be able to supply all the capital yourself. But if you are doing good and have foreseeable bright future, it is better to go for loans as you don't want to tie up too much of your own funds and it's good to get the experience of managing borrowed money.
Friends and relatives
After you have put up some of your own money, friends, acquaintances, and relatives are probably the source to consider next. About 13 percent of entrepreneurs obtain start-up capital from this source.
When you borrow from people you know, everything starts out on a friendly basis. But beware that once the loan is extended, the friendly atmosphere may dissolve. Money can do strange things to people. For example, you may find that your friend, who lent you money, keeps calling up every day or so to see how things are going and to pester you with unwanted advice.
Working partner
One solution to the money problem is to take on a working partner who makes an investment and shares the running of the company with you. The capital and skills of two people are combined. In an ideal arrangement the partners' qualities complement each other.
One good combination is to team up a person having expertise in the type of business with a person who can infuse capital. Another good combination would be a person with administrative skills teaming up with one who has strong operational know-how.
If you're not the kind of person who can do it all, face the fact honestly. Identify your own strengths and weaknesses, utilize your strengths and find a partner who can fill in the gaps.
Keep in mind, partners sometimes may fight and argue. This is healthy, provided the discussion stems from different experiences, knowledge, temperament, and ideas about the business, rather than personal reasons.
Although a partnership is easy to set up, its better to have an attorney prepare a contract spelling out the rights and responsibilities of those involved.
Commercial banks
If you are launching a new business, chances are good that there is a commercial bank ready to invest in your future. However, remember most of the bank funding goes to small businesses that are already in operation and have an established track record of profitability.
Source : http://www.website-articles.net
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