Where and How to Get One: Securing a loan for a small business is not easy, but it is possible. It is important to correctly evaluate how much money you will need and to have a business plan that will allow you to repay the loan according to the agreed terms.
Sources for secured business loans include banks, lending institutions, credit unions, trade groups & organizations. Depending upon the type of business you are getting the funding for, you will want to pick a lending source that has experience with your type of business. It can be difficult and frustrating to explain a business plan to a loan officer that has not clue how your type of business works or what should be considered in evaluating your ability to repay the loan.
Be careful to know and understand the terms and conditions and especially the interest rates and default conditions. Establish what happens if you are late with scheduled payments as to the amount and severity of the late fees and what can trigger a foreclosure or asset seizure. Know the downside of the loan so there will be no surprises in a worst case scenario.
Since the loan is secured by the collateral, the lender has the right to resell the property submitted should the borrower default on payments. The interest rates are significantly lower because the loan is so well secured.
Worst Case – The Cost When Things Don’t Go Well?
Know What You Are Getting Into: To start a new business takes a lot of work but it can be well worth the trouble if you are willing to put in the work that owning your own business requires. Many people underestimate the commitment of time, energy and resources required to start a new business.
With no one to be your boss, many people lose their way and cannot adjust to working for themselves. Before you start down that road, make sure you are willing to work harder for yourself than you have ever worked for someone else. As I mentioned, it can be well worth it in the long run but there will be many long days, late nights and weekends that you will be working to make your new venture a success.
The funding you may need from time to time is one of the risks you must be willing to shoulder, in order to help your business grow. There is a definite element of risk involved and you very well may need to put up your own personal property as collateral for the funding your business requires for growth.
The Rewards – When Things Do Go Well!
Bankers and business analysts make the risks and rewards sound very clinical and matter of fact, but I can tell you from experience, the satisfaction of seeing your business grow and knowing that you have created something new and made it grow, is an accomplishment that is impossible to adequately describe. If you are truly committed to owning your own business, then by all means, do whatever is necessary to fund that business. Just be sure you are willing to be patient enough to take the successes and failures in stride because you will have both. That…I can guarantee!