Securing local business loans can be a major challenge if you don’t know how to “talk money”
By: Hitesh Khan/
All of us know how important it is to have clear and concise information to make smart business decisions. To start your new business off on a strong financial footing, experts agree have the most up to date information is the best strategy for success.
While poor management is cited most frequently as the reason businesses fail, inadequate or ill-timed financing is a close second. There are several reasons why securing local business loans can be a major challenge:
- It can be difficult for an entrepreneur to put a dollar value on a new business idea.
- Some people who are eager to start a new business are not prepared to “talk money.” They either don’t know how to or don’t want to plan, research, ask for, consider choices, think about, and spend money – that is, business capital.
In your attempt in securing local business loans, you should start now to develop or improve your skills and gain the knowledge you need to “talk money.” It can be your most valuable new business asset.
Start with a Good Look at Your Personal Finances
There are several important reasons to begin thinking about Funding Your New Business with a review of your personal finances:
- A new business seldom generates enough to replace a regular salary, at least in the beginning. Be sure you can meet your personal expenses with a minimum — or no — contribution from your new business.
- For every story you read or hear about someone who “used all my savings and maxed out every credit card” to start a successful new business, there are hundreds of other people who did the same thing – and after a few years of hard work, they had no savings, no credit, and no business.
You can avoid such bad luck story in trying to get small business funding by maintaining your personal financial health is the key.
In your attempt at securing local business loans remember that it’s essential to keep personal and business funds separate.
This may seem obvious, but you might be surprised at how often mixing personal and business funds becomes a serious issue for small business owners. The best idea, as soon as you decide to move ahead with your business concept, is to set up a separate business bank account.
The discipline you use to keep personal and business expenses separate will help you to avoid the “trickle out” theory where funds just seem to evaporate – or projects do not generate the profits they should.
Options for how to pay yourself for expenses and salary.
Many small business owners think of themselves as suppliers to their small businesses. Of course, you need to be paid for the items you provide to the business:
- space for a home office
- mileage on the car for business meetings
- electricity, and other utilities
One option to consider is paying yourself for any expenses above $100.
For example, if your total mortgage expense is $2,100 and you use one room of your apartment for your business, charge the business $300 rent and pay for it. You might combine the other smaller expenses in one bill for miscellaneous expenses, perhaps $200. Each month, you would receive $500 from the business for the use of your home facilities.
Any expenses you have made for the business, such as buying office furniture, can be reimbursed immediately or amortized (paid in segments over time). Again, write yourself a business cheque with a clear description of the expense.
What about a salary? It all depends on the cash flow your business is generating. You have to balance your financial requirements with the business needs for funds. Keep in mind that the less money you take from the business during the start-up phase, the faster your business will reach the break-even point, the more likely it will be to generate profits and be in a better position to get small business funding.
As a entrepreneur, you can choose to get small business funding from several different sources including a bank, as
well as private finance, and investment firms. Some people prefer to work with a single financial services provider, while others may want to use a combination of resources to meet their business financial needs.
There are many factors to consider when you try securing local business loans, and good negotiators can always tweak terms to have an advantage.
If you have to bargain business loans be mindful that loan specialists can be your best ally. They can set you up on a path that can get you the best personal loans in a quick and seamless manner. They can also arrange for the Best Home Equity Loans in Singapore as they have close links with the best lenders in town and can help you compare Singapore loans and settle for a package that best suits your needs.
Whether you are looking for a new home equity loan or to refinance, our loan specialists can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the loan. And the good thing is that all their services are free of charge. So it’s all worth it to secure a loan through them. Always remember that you need to borrow when you don’t need the money and are in the black. This is because when you are in the red and are struggling, no one would lend you any money,