How to get Capital for your Business

Author: Joseph Lizio

Most small business owners usually only think about one thing when their business needs capital " and that is to get a single loan to cover all of their needs. The problem is that trying to find a single loan for all your businesss needs can be very expensive, time consuming and inefficient. You would be better off matching your loan with your needs.

It is kind of like visiting your doctor. If your doctor is a general practitioner " he/she will refer you to a specialist for, say, you heart or for your allergies. The specialist has better knowledge about their specialty and can better serve your needs.

The same is true for your business capital needs. Thus, lets say you need $100,000 for your business where half would go to buying new equipment and the remaining would be split between operating working capital (more inventory) and advertising (general business development).

If you go to your bank and ask for a single $100,000 loan " your chances of getting that money is slim " that is a lot of money for a bank to be lending out without tons of collateral (although the equipment could be partial collateral " taken in whole, the collateral does not cover the entire loan amount). If your bank does agree, it will access a high interest rate and huge fees due to the risk of such a large unsecured loan.

Another option is to match the loan to the need. If you need equipment " find an equipment loan specialist. Here you will get the equipment you need at a much better rate and terms than from your bank " they specialize in helping small businesses get the capital they need " even for start-ups. Plus, these types of secure loans are easier to qualify for and normally do not put as much emphasis on personal credit histories as do traditional lenders. Then, for the working capital, use working capital assets like factoring your Accounts Receivables, Purchase Orders or Credit Card Receipts. Then, for the advertising capital " this is the time to approach your local bank or other business or personal loan provider for a smaller $25,000 loan " which should easily approved at much better rates and terms as there is less risk for the lender (bank pricing " interest rates and fees - is usually based on cost of funds and risk).

This is a much better option than running from bank to bank only to be turned down.

Bottom line " you get the funding you need to grow your business at much better rates and terms than from a single, larger loan from your bank as the goal is to get what you need to start or grow your business and not spend all your time fighting with your bank.

About the Author:

Joseph Lizio holds a MBA in Finance and is the founder and owner of business Money Today - <a href=”http://www.businessmoneytoday.com”><a href=”http://www.businessmoneytoday.com” target=”_blank”>www.businessmoneytoday.com

Article Source: ArticlesBase.com - <a href=”http://www.articlesbase.com/small-business-articles/how-to-get-capital-for-your-business-959772.html” title=”How to get Capital for your business“>How to get Capital for your business

Related Posts

• High potential and quality service venture capital in china
• Keep On Building Your Social Capital for Better Future! | ArticlesBase.com
• Realty Rising in Kochi II
• Is Private Equity The Right Option For Your Business?
• Real estate in the financial city of India | ArticlesBase.com

---

Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically each day to your feed reader.

Business Tips Blog | Powered by WordPress | ElegantBlue is a custom theme by Nathan Rice