The proper financing for small businesses can often be very difficult to find, due to the fact that small and medium sized businesses have one of the lowest loan approval rates. The reason for this is that these businesses typically have less of a performance history and limited resources to grow, which makes them a riskier venture for lenders. We’ve put together a list of five tips for help you obtain financing for your small business:
Make sure that your personal credit is in order
Because of the risky nature of new business ventures, a lot of consideration is put into whether or not the person running the small business can stand behind a loan if the business doesn’t succeed. This is why when looking to finance your small business, it’s important to make sure that your personal credit is in order. Typically, a personal credit score over 600 is a good base for negotiations with financers.
Maximize your personal investment
Any serious financing partner will want to ensure that you have personally invested a significant amount into your business before they’ll offer any additional financing. Being personally invested in your business shows investors and financers that you’re confident that your business is going to succeed. Why would anyone want to invest in your new business if you aren’t willing to do the same?
Be clear about the type of financing you require
There are many difference financing models available, which is why it’s so important to be clear and specify what type you require. Is it working capital? How about equipment financing? Whatever it is, you need to specify what kind of financing type, the amount of financing you’re looking for, and how much time you need to get this financing.