How to Qualify for a Business Loan

Almost everyone that wants start a business needs money. Also, most of us don’t have enough money to cover all the costs of a business start-up. Therefore, the obvious answer is to borrow money from a bank or other funding agencies. But will you qualify for a business loan? And even more, what should you do to qualify?

How to qualify for a business loan

The thing is with a business loan (and any other loan for that matter) is that the loaners want their money back after a certain time. They will borrow money to lenders that they think are capable to pay it back. As a result, the lender must provide reasonable proof that the business will be viable and that he/she has enough collateral to cover the loan amount. The lenders also want to see that you are able to run a business and that you are passionate about your business idea.

It will be of great help if you can prepare for your business loan application.

Five steps to help you qualify for a small-business loan

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Borrowing Money from a Bank to Start your Business

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Borrowing money from a bank to start your business is not an obvious option for prospective business owners. Unless you are well known, with a track record of starting and running successful businesses, no formal sources of capital are likely to invest in you in the early stages of your business 1.  Banks usually require an operating history to reduce their risk.

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Getting Money for Your Business – Other Individual Investors

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Prospective business owners may approach other individual investors to get money for starting their businesses. A large number of private individuals invest in others’ entrepreneurial ventures. They are primarily people with moderate to significant business experience but may also be affluent professionals, such as lawyers and physicians 1.

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Using Personal Savings to Start Your Business

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You, the aspiring entrepreneur, frequently have three sources of getting money to start your business: (1) personal savings, (2) friends and relatives, and (3) other individual investors. Using personal savings to start your business to start your business will now be discussed.

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Bootstrapping – Starting a New Business with Your Own Money

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One of the first and most important questions that most of us ask when considering to start our own business is where the money would come from? The answer for more than 80% of start-up businesses is bootstrapping. Indeed, according to Lahm Jr and Little Jr (2005), the overwhelming majority of entrepreneurial companies are financed through this highly creative process.

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