If money is an issue, you’ll need to raise cash to get your business going. In a time of hard to get credit, that can be difficult, but you can increase your odds by doing the following:
Write up a business plan — Don’t expect anyone to lend you money without you having a business plan in place. This is for your benefit because a business plan will force you to consider what your business is all about including its structure — retail, service, food, manufacturing — and what sort of legal form it will take — corporation, LLC, partnership — and the types of product(s), customer base and your market.
Take on debt or tap equity — Businesses get started by either taking on debt or using personal resources such as equity built up in a home, bank accounts, retirement funds and other reserves. Debt can be secured or unsecured, the former through credit cards and the latter through putting something of value you own up as collateral. The former option usually means you’ll pay a higher interest rate, but if you default the bank has no assets to tap. The latter option can mean a more competitive rate of interest, but you could lose personal property, such as your house.
Check your credit — If you plan to borrow money, your credit history will have a substantial impact on whether you can get new credit and at what terms. Now is the time for you to obtain copies of all three of your credit reports and reviewing them closely. Those reports will show your open credit lines, payment history, credit inquiries and a host of other information about you including where you live, your employer and your home. Correct problems and obtain your credit scores. If your credit is 700 or above, then that score suggests “good credit management” according to Experian.
Money Can Wait
Some businesses, such as freelancers working from home, need very little start up money. Access to a computer, an Internet connection and phone service may be all that you need to launch your enterprise. If so, save the loan applying until you really need it — when your business has grown and you’re ready to expand it.
Resources
Entrepreneur: Elements of a Business Plan
Experian: What is a Good Credit Score?
Small Business Administration: Starting a Business
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