Starting a business and one of the aspects that entrepreneurs find most daunting is raising start-up capital. Gone are the days of pitching investors with hot new technology ideas. Today, entrepreneurs are much more likely to dive into their own pockets and hunker down for a battle to start up and stay alive. But if you don’t have the cash in your wallet, what do you do?
By: Hitesh Khan/
Luckily, there are still options for funding new companies and raising start-up capital, but finding and securing the cash will take careful research, good negotiating skills, and, above all, an unflagging commitment to launching your new business.
Start your search for raising start-up capital with a good business plan that shows investors and lenders your company’s potential.
Follow that up with a thorough knowledge of the resources available and a determination to make your business a reality, and you should be on your way to uncovering a source that fits your new business’s cash needs.
Lenders like to see an owner with a business plan. The business owner needs to show why the business will be successful before applying for a business loan.
And they should have projections to show that they’ve thought about what kinds of revenues and costs they’re going to generate.” In other words, a business plan clarifies why you need the money, how much you need and how you will repay it.
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.
Generally, it’s a good idea to get the loan documents ahead of time so you have a chance to review them for a couple of days before applying for a business loan. Most lenders won’t have a problem sending advance copies of the documents, but they will generally only do so if they’re specifically asked.
The documents can be somewhat complex – which is why you may need an independent loan specialist to help you understand what the fine print means.
Tapping personal ties in raising start-up capital for a company that’s either too new or too small to get financing elsewhere is an age-old formula that still makes sense.
But here’s one risk too big to ignore in today’s highly competitive capital marketplace: if you don’t follow professional standards in structuring and documenting loans or equity arrangements, your sloppiness will likely come back to haunt you.
That’s because if and when your company grows to the point at which it can credibly approach banks or professional investors for funds, their lawyers will examine your corporate capitalization structure with a fine-tooth comb.
If possible, get to know your business banker now, before you need financing. This will give your banker an opportunity to get to know you and your business, how you think, what your goals are, what the financial situation of your business is.
Building a relationship with the lender you are currently working with can help them get to know the intricacies of how you operate your business. They want to know who your customers are, who your vendors are, and what’s going on in your industry. If they can measure different kinds of health and stability indicators for your business, they might be more likely to renew your financing at a lower rate down the line, or graduate you to a better product.
Letting the lender understand your business can only help you out. But if you aren’t open to building a relationship with your lender, then it may be best to work with a reliable loan specialist who may have established relationship with the many lenders in Singapore.
And the best news is, the services of an independent loan specialist is often free. For starters, you should read up more so that you have some basic understanding of how an independent loan specialist can help you in your search for the right loan.
How to Secure Small Business Loan Quickly
In raising start-up capital, talk to the loan consultants at iCompareLoan. We 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.
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?
Contact us for advice on a new SME loans.
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