Where's the Money?????
"Where's the Money?"
The fact is, small businesses are still having a very difficult time finding the business financing they need to start and support their operations. Given that as a start, here are some further thoughts:
• The requirements have become much more stringent for small business lending - Banks and other conventional lenders are open to requests, but only from very solid companies with a 2-3 year successful track record, a clearly documented ability to repay the loan, and great collateral.
• Where there may be an opportunity for bank financing - you will need a complete business plan (You should have one anyway, of course). There are many public agency and non-profit business counseling resources that will help put this together for no cost - this can be an extremely valuable resource in the broader sense - getting good advice on all aspects of business development. Often these agencies have connections with local lenders where they can make a helpful introduction. These programs are all listed at www.BUZGate.org.
• Credit Cards - 46% of all small businesses use this as base financing. The good news is that this resource is pretty available for most start-ups. The bad news is that they carry a very high interest cost - which can severely impact a new or struggling small business - and can negatively affect your credit score which can be a borrowing detriment when the lending environment improves
• Retirement Funds - Many recently laid-off individuals are starting their own small business - and often using their retirement fund to finance the operation - If they are using a 401K, they should make sure that it is configured to allow them to borrow from the fund rather than cashing-out - if they cash-out, they will have accrued taxes to pay and a hefty penalty that can equal as much as 1/3 of the fund - both of which are avoided through the borrowing option
• Friends and Family have long been a source of financing for new small businesses - there is essential professional help to support and properly document such activity (http://www.buzgate.org/8.0/mn/ch_virginmoney.html)
• Public Sector Funding - Look to state-based and other public financing programs that may have specialized financing programs that are driven by more social outcomes such as job creation or HUB Zone deployment.
• Finally - minimize the investment - keep your breakeven at rock-bottom - don't spend a dime that isn't absolutely essential; don't buy expensive equipment - look for used bargains - minimize cash outflow commitments - watch labor costs - outsource where possible rather than maintaining employees
Good luck from Dr. Bill
The fact is, small businesses are still having a very difficult time finding the business financing they need to start and support their operations. Given that as a start, here are some further thoughts:
• The requirements have become much more stringent for small business lending - Banks and other conventional lenders are open to requests, but only from very solid companies with a 2-3 year successful track record, a clearly documented ability to repay the loan, and great collateral.
• Where there may be an opportunity for bank financing - you will need a complete business plan (You should have one anyway, of course). There are many public agency and non-profit business counseling resources that will help put this together for no cost - this can be an extremely valuable resource in the broader sense - getting good advice on all aspects of business development. Often these agencies have connections with local lenders where they can make a helpful introduction. These programs are all listed at www.BUZGate.org.
• Credit Cards - 46% of all small businesses use this as base financing. The good news is that this resource is pretty available for most start-ups. The bad news is that they carry a very high interest cost - which can severely impact a new or struggling small business - and can negatively affect your credit score which can be a borrowing detriment when the lending environment improves
• Retirement Funds - Many recently laid-off individuals are starting their own small business - and often using their retirement fund to finance the operation - If they are using a 401K, they should make sure that it is configured to allow them to borrow from the fund rather than cashing-out - if they cash-out, they will have accrued taxes to pay and a hefty penalty that can equal as much as 1/3 of the fund - both of which are avoided through the borrowing option
• Friends and Family have long been a source of financing for new small businesses - there is essential professional help to support and properly document such activity (http://www.buzgate.org/8.0/mn/ch_virginmoney.html)
• Public Sector Funding - Look to state-based and other public financing programs that may have specialized financing programs that are driven by more social outcomes such as job creation or HUB Zone deployment.
• Finally - minimize the investment - keep your breakeven at rock-bottom - don't spend a dime that isn't absolutely essential; don't buy expensive equipment - look for used bargains - minimize cash outflow commitments - watch labor costs - outsource where possible rather than maintaining employees
Good luck from Dr. Bill
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