Loans, Insurance & credit card information

Growing a business is a lot like raising a family. Initially all aspects of the children’s lives revolve around the parents, but a gradual separation allows the children to one day stand alone. Business finances are a lot like that.

If you’ve been in business for a little while, you’ve probably already taken out at least one business loan. The initial business loan probably came from family members or friends and was used as seed money. They chose to make the loan because of their relationship with you and their confidence in your plan.

If you haven’t gotten it yet, the next business loan will be startup money, and will likely be your first bank loan. Because your business hasn’t yet created its own credit history, your lender will decide whether to lend you the money based on two things: your business plan and your personal finances.

Starting a new business is exhausting and can swallow up its owner’s personal life. Many areas of life tend to get neglected during startup, but if you plan to get a startup business loan, you can’t afford to neglect your personal finances. Bill must be paid on time. Debts must be paid off. Your personal credit score must be excellent.

Once your business is underway, your next business loan should be a line of credit. By the time you make this application, the bank won’t be as interested in your personal finances as they are your business’ revenue and cash flow. Before you apply for your business line of credit, you need to have completely separated your personal finances from those of your business.

To see what the bank is going to see, you must pull a copy of your business credit report. Check first for errors; a recent study found that 30% of all credit reports contained errors serious enough for a bank to deny a personal or business loan. Correct any errors and if you see any negative entries, make every effort to clear them. This can’t be done overnight, so plan ahead and pull your credit report at least six months before applying for your business loan.

There are a number federal small business loans from the US government available to the entrepreneur. Who the loans serve and their purpose change depending on the loan product, but the government does want to see small businesses grow. Small businesses employ more people than large businesses and is strong growing trend. Additionally, as more people lose their jobs and can no longer find comparable work, many will turn to starting their own business.

The SBA has a number of loan products available for the entrepreneur. Sadly, start-ups may have trouble getting approved, but once established a business should be able to pursue them without problem. Federal government small business loans start with the SBA Community Express loan. This a low document loan with quick approval, but the lending amounts are lower. The primary SBA loan program is the 7(a) Loan which has a high maximum lending amount. One works with a bank to get a loan guarantee from the SBA. The loan requirements are rigid and turn around time can be long. Many banks will simply approve a loan if one looks like they will get approved, rather than wait for SBA acceptance. The SBA also has loan products for construction, bonding, exporting, community development, and revolving lines of credit.

However, the SBA is not the only small business loan available from the federal government. The USDA has a loan program available to businesses in rural areas. Then the government also helps community development organizations lending money. HUD gives money to community groups that they can lend to small businesses. Other agencies do the same, provide seed money to community groups to loan to small businesses. The idea is that this money keep revolving, and the government only has to seed once.

Also, the government provides grants to numerous small business centers. These centers help entrepreneurs get financing from local lenders or they can tap the government resources. This is a cost effective way the US government gets small businesses started and keeps them growing.