5 Tips for Getting Your New Business Startup Financed

Getting the required financing for a new business start up is one of the toughest steps involved in getting your business off the ground. However, not everyone is lucky enough to own money to personally finance a new business start up or get it funded by relatives and friends. In fact entrepreneurs have to turn towards institutional finance for starting up a new business. Getting institutional finance is not easy, especially in the current financial environment, but at the same time, it can be quite easy to get new business start up loans if you follow the following tips:

1. In order to increase your chances of getting a new business start up loan,  try and approach banks and lending agencies that deal with this kind of thing. There are many banks that do not want to get involved with new small business loans while there are others who have made it their USP. Approach banks that deal with small business start up loans, or those that generally give loans to businesses in your industry.

2. Be honest in your business plan. Bankers and lending agencies deal with hundreds of small business owners each day and most banks have staff competent enough to recognize a fallacy when they see one. Quoting wrong figures or presenting unrealistic estimates will get your loan application rejected in no time by any bank employee worth his salt. The best course to take is to present data that is backed by solid facts and figures and to stay on the conservative side when quoting figures and projections.

3. Make sure that your business plan deals with risks and contingencies. If you present a business plan that does not consider risks and failures, then you have a pretty high chance of not getting your new start up business loan approved. Each and every start up has a risk factor of at least fifty per cent, and if you do not consider this important enough to plan for, your banker will really not think that you are smart enough to bet his or her money on.  Be realistic, plan for risks and contingencies and your chances of getting a loan will definitely go up.

4. Be ready with all the documents when you approach a bank or a lending agency for a new business start up loan. Even though your business plan is crucial to the process, it is not the only thing that your lenders will consider. Make sure that you submit at least three year projections of cash flows and other finances, your bank account statements, a statement of your total assets that might be required as collateral, for example ownership papers of property that you own and your latest credit report. This will not only let your lenders know that you mean business; but this preparedness will create a positive impression that might tilt the balance on your side.

5. Don’t give up with the first or second bank. In the current financial environment, you might have to submit and present an N number of new startup business loan applications before one of them gets approved.  Keep going to one institution after the other, learning from your mistakes, anticipating questions, preparing answers and putting your best foot forward.  Remember the first new business start up is always the hardest!