Small Business Information Center. Com

Small Business: Borrowing to finance your business? 

Borrowing for your small business:

Many people have significant worries when it comes to debt and have a major aversion to borrowing large amounts of money to finance their small business.  Although borrowing money is frequently a common practice in starting a small business, you can minimize or simplified this process by limiting your initial investment.  You may find in fact, that you have enough money accumulated through savings, or you may be able to borrow for your small business from a number of sources, including family and friends. 

If you want to start a small business that requires a great deal of money, you may have to work hard to get it.  It may be either very difficult or very easy to get, depending upon who you are, what you own, your credit history and what you know about running a small business. 

If you believe borrowing for your small business is relatively easy it could be for one of several reasons.  These could include having family or friends who are willing to help.  It also might involve having enough assets, and/or a good relationship with a banker that will loan you the money for your small business based upon your record.  Getting loans in these situations frequently is relatively easy. 

Getting business loans from banks, governmental agencies or private venture capitalists are usually not that easy to get.  You must do your homework.  You must be able to show that you are a good credit risk and that you have a detailed business plan showing where you are with your small business, and where you are planning to go with it.  You must be able to demonstrate to potential lenders that you can manage and grow a profitable small business. This usually takes time and in-depth knowledge of several business areas.  If these issues do not bother you, there may be a significant variety of small businesses which you may be able to consider. 

While most of these financial considerations will be discussed on separate web pages throughout this website, we will assume on this page that you do not want to start by borrowing heavily.  Some individuals do not like the worry and risk involved in having significant debt when beginning their small business.  It is best once again, to borrow the bare minimum, well within your ability to pay back.  Also, you must predicate your business plan which establishes your financial needs, based upon problems which may occur.  These contingencies must be dealt with in a well-thought-out business plan for your small business. You need to be able to provide yourself the greatest opportunity possible to survive (especially in those really crucial first three years).

Information provided by Will Davis’s Start Your Own Business for $1000  

By Paul Susic MA Licensed Psychologist Ph.D. Candidate President/CEO Susic Psychological Consulting P.C.

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