Are you about applying for a loan as a business owner or startup entrepreneur? If YES, here are 3 tips to help you know how much money or business loan to apply for.
You see, different types of business need different amounts of capital in order to be established and there are several small business financing options available. Some entrepreneurs dare to get start up business loans that is worth of millions of dollars just to start their own enterprise. Of course, getting business loans can be risky, both for the lending firm and the one who acquires the business loans.
Amidst the world economic turmoil which has started from the collapse of big businesses at Wall Street, establishing a business is actually taking a huge risk. It is not only that some banks and other non-bank lending institutions are tight in giving up money as start up business loans; your financial and credit status also play a very crucial part in getting business loans.
Since start up business loans are part of the firm’s business, the primary goal in giving loans to perspective clients is of course, to ensure profits. These profits are in the form of interests. Some banks and other lending institutions refuse to give up much money, especially if they know that the debtor cannot pay that much, or will have a difficulty in paying the loaned amount due to the current economic situation of the world.
However, there are some financial institutions that are willing to take risks by giving start up business loans that amount up to 70 percent of the total assets of the person acquiring the loan. But the question is not actually the risk of non-approval of your start up business loans application but how much money does your business need to be able to have it jumpstarted? Well, the tips below will help you.
3 Tips to Help You Know How Much Money or Loan to Apply For
1. Study your business first and the opportunities therein
A careful study of the business opportunities and the skills at hand could be the first step in determining how much money to get from start up business loans. To put up an internet café, for example, you won’t need millions of dollars. But when venturing into real estate development, you will require you bigger amount that business loans could be up to billions of dollars since acquiring lands, equipment and the other needs for the said business are not that cheap.
2. Consider your capability to pay back the loan-: Small and micro-business, like a small internet café or a small coffee bar, can easily get start up business loans for the capitalization would not exceed up to US$ 5 million. But the smallness or the bigness of the amount of the business loans are also dependent on your own capability of paying the start up business loans incurred.
3. Check your credit history / financial statement
Actually, financial institutions, banks and other SBA firms, look into your financial history to determine whether you are qualified to be given start up business loan or not. They will check how much money you have in your account, the cost or value of your home, and other assets that can easily be turned into cash just in case the bad weather comes after your business, disabling you to pay your outstanding loans—the interests, plus the penalties due to nonpayment of the loans incurred.
In reality, capital is not the issue in making the business profitable; it is your financial management skills, plus making those intelligent decisions would make your business successful. Some hotdog vendors have had their fortune just selling hotdogs. Take note: they just spent a few and now they are garnering more. Think about that.