Examining your financial situation is a crucial step to determining your cash needs for the start up process. Making a business plan marks the beginning of the project. Therefore the value of financial planning cannot be understated. It is an aid to driving business growth, maximizing the application of working capital, targeting the use of important resources. Emphasizing on the financial requirement and ways and means of repayment will help in procuring business loan financing. Unfortunately, due to budget, time or internal resource constraints, companies are often unable to enjoy the benefits derived from financial planning excellence.
There are several choices for financing sources but each carries its own opportunity cost. You may need a loan for only a portion of the expense requirements; remember that interest on any loans become part of expenses. It is not easy to procure a business startup funding .Collateral requirements and well laid-out business plan are the essential prerequisites for the loan. This sometimes takes a long time to avail a business startup loan. Since there is a lot of risk involved in lending to new entrepreneurs, banks are not in favor of it. Therefore, a lot of hard work is necessary to prepare the ground work for procuring a business startup loan.
Obtaining money refers to two separate processes; banks will likely not lend you the entirety of the sum that you will need to start your business. Banks and other financial institutions expect potential business owners to have their own money to put on the line, as well. In fact, lenders usually require that potential business owners put up as much as a third of the startup costs. This means that if you expect to need $ 100,000, $ 30,000 of your own money will be expected to be put into the business. If you don’t have that sum there are other sources to look to, in order to raise that money.
Loans so obtained can help in recruitment of manpower, expanding business, buying equipments and stationeries, renting office facilities and capitalizing on business opportunities. Every aspect of the business can be covered by business financing loan. The money can be used to finance the purchase or renovation of a building. Advertisement of the business can be done with the money. This can be done through flaunting banners, distributing business cards, starting a website or announcing on radio and television. It can also help to purchase new equipment and tools.
Thus a business startup loan can aid an entrepreneur in many ways. If you really believe in yourself and the business idea then this is a viable option but remember to proceed with caution at all steps.