The greatest challenge small businesses have is getting loans.
Almost nobody will be willing to give loan to a small business because they are often high risk ventures — you never can tell how soon they will fold up. What then happens to the genuine small business owners who are determined to succeed? Inasmuch as small businesses have a culture of non performance, those who are determined to succeed can still get funding to either start or expand their businesses — we all know that the national economy is driven by small businesses.
The reason for underperformance of small businesses is often because they take up loans without proper planning. Most of the financial institutions that are in the position to help would often require that you present your cash flow statistics, that is, how much money comes into the business and how much money goes. As a starter, there is just no way to make this presentation.
Factors to consider before applying for loans As a small business owner, it is paramount that you consider various factors before ever applying for a loan. This will help you to be prudent in utilization of the loan when you do get it. Some of the factors to be put into consideration include; These are some questions you should ask yourself before you get a Foreigner Loan Singapore
1. Do you have a proper business plan?
A business plan is like a guide to help you plan efficiently every step of your business. Every business, just like every building, is supposed to be guided by a well-structured plan. It is in this piece of document that you evaluate your expenditures and projected income. A good business plan alone can guarantee you a loan facility from an investor who sees great potential in your business.
2. How much do you need? This is the mistake many small businesses make, taking more than they need.
Whenever you have the opportunity to get a loan, always have at the back of your mind the consciousness that borrowed money must be paid back. With this consciousness, you would have the discipline to take just what you need and not more.
3. How much capital have you invested in the business? Your chances of getting a loan become slimmer as the amount of finance from your pocket you put into the business nears zero. Investors are always keen to know how much of your own finance you have put into the business and it I just logical, if you as the business owner are not willing to stake your money in it, how
then will you convince another person to do that?
4. What type of funding do you need? There are grants (in which you are not required to payback) and loans (which need to be paid back over agreed space of time). Before seeking for fund, be sure of the type you require so that you don’t run into financial troubles over time. The need for long term plans Most short businesses are often too preoccupied with now that they forget to think about the future.
For any venture to be sustainable, it has to be backed up by a long term plan and in this case, long term financial plan. So before thinking about the funds, have this at the back of your mind.
The problem with starting small businesses
The major problem with starting a small business is — it is hard to get funding for startup. Virtually no one, including commercial banks would be willing to stake their money with you, even with the best business proposal.
Most of the banks would require collateral tantamount to the intended borrowed amount.
Sourcing for funds to start your business Getting funds is always a herculean task as far as startup is concerned. However, all hope is not lost if your passion drives you to owning a business. There are still modest and simple ways to source for funds if you have a strong business plan and projections.
1. Angel Investors
There are people who are known as angel investors. These set of people are grouped under high risk takers. When you bring your business plan to them, they look at it and if they deem it fit, they give you the money to kick start the business on the agreement that a certain percentage of all business profits will come to them. Angel investors are not everywhere but a little research will help you find one.
2. Commercial banks
This remains by far the financial institution where many people run to for aid. Some of the things that may be required of your to present besides your business plan will include; credit history of business and person, financial statement of project, cash flow predictions and guarantees. The above requirements can be easily met by some but what about those that cannot? The bitter truth is that if you can get a few of them, it still puts you at par with someone that cannot because most financial institution would require all of them before they would agree to your request.
Put your college certificate to the test There are still financial institutions that would accept the originals of your college certificate as collateral for lending. Owing to the strong importance attached tertificates, these financial institutions are ready to give out loans on certificate basis with the prediction that the importance of the certificate will make you pay up.
- The greatest challenge of small business is funding.
- Small businesses are high risk ventures.
- Financial institutions will require cash flow statistics to give out loan.
- Every business should have a proper plan.
- Always borrow only the amount you need.
- Be conscious that borrowed money must be repaid.
- Consider going for grant or loan.
- It is good to always have a long term plan.
- National economy is driven by small business.
- A good business plan sums up expenditure and projected income.