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You have embarked on an exciting journey! Congratulations and best wishes. I'm real excited for you because you are now a member of a very special comunity! The Entrepreneurial comunity!

The cost of a start up business loan

You are excited! You know you have a winning business idea and all you need is a few thousand dollars and you will be set. It really is a sure thing! You would be crazy to miss out on this.

The Excitment of A Loan Approval


If you have bought a car, borrowed for a stereo, or for a trip somewhere, you know the thrill of an approval on the loan application. It's great to know you qualified for so much money. Never mind that you will eventually have to pay the piper! Who cares, right now, all you care about is knowing that you are going to get what you have always wanted. Is there any reason why borrowing for your start up business should be any different? Not really, except that you probably will be borrowing a lot more money. But it will be no different, will it?

As I mentioned elsewhere, you will be ok, as long as you have enough funds to guarantee your request. If you are employed and barely maintain a minimum balance at the bank, you can forget it! Never mind that you deposited your paycheck at that same bank for the last 30 years. That won't cut it.


The 3 C's of financing

Whether you are going to borrow from a bank or any other financial institution, you will be faced with the 3 C's (at least) in one form or another. How well you match these will determine how the financial institution will respond to your request.

The first C of financing:

Collateral! This has to do with your ability to come up with funds if something goes wrong and you drop out of your scheme! Collateral could be anything from jewels, real estate, retirement funds, and so on. The more established these items are, the better. Car, boats, airplanes, motorbikes, and so on, aren't really worth it. Their value deteriorates steadily from the moment you acquire them.

The second C of financing:

Capacity! Capacity has to do with your ability to meet the payments should something happen and your venture fails. What this means is that given your present situation, would you be able to make the payment on the funding you are applying for, on top of all other of your current obligations. This is easy to determine, too. This more than any other will determine whether or not you will at least be considered for the loan.

The third C of financing:

Character! Although character is not looked the same as it used to be where a handshake and your word were all that mattered in most cases, today, due to our (US) sue-happy attitude, it takes a lot more than that to qualify you for a loan review. The way this is looked at is on things such as, how long have you been at a job, at a location, what kinds of organizations do you belong to, who do you know within certain organizations, and so on. This is more subjective than the others but does carry weight.

There is a saying that more business deals are conducted on the golf course than anywhere else and although fanciful, it is directly related to this issue of character. Does that mean that you should take up golf? Not at all, but it does mean that you should find out where the influential people in your area congregate and try as much as you can to congregate there as well.


What does this have to do with your start up business loan?

Quite a lot! Stay tuned and we'll continue this discourse soon.

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One more: Borrowing from relatives

Whatever you do, this is definitely one to ignore. No matter how much of a sure thing you have going. This one is rather interesting though! Do you want to get a start business loan from a relative? First, it will be the most demoralizing thing to do as your relative will probably try to get you to go to work at mickeydees first and forget all about your business. Besides, if you aren't able to pay it off do you really want to go to the next family reunion knowing you owe your relatives money? It will be a very hard thing for you to live down and when you do succeed you will not hear the end of it, �if it wasn�t for me �giving� you that money to help you start the business you would still be working at mickeydees.� Definitely "Not worth it"!


These are just a few options that are usually considered when a start up business decides it needs financing. These are not the only options. I brought these up so that you know they are always foremost on someone who is looking to start a business. Unfortunately, these are the most costly to deal with.


The reason why is simple. Banks look for sure things, and so do credit cards, and getting an equity line of credit.
When it comes to relatives and friends, the old saying is worth heeding, "Never a lender not a borrower be." Lenders will loose the relationships they had before and borrowers will often enough be at the mercy of the lenders. When it comes to relatives, it is even worse! You are judged on all the prejudices carried by those you go to for support or for financing.
If you would like more information on this or any other items here send me an email loans@start-business-loans.comwith your questions

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