If you’ve been following along with the young entrepreneurs that we’ve interviewed you know that getting a business started takes work. And it also takes money. When we spoke to the owner of Raw Denim, she mentioned using her own savings and money from investors to get started, but a small business loan is also a way to raise funding for your business.
The Small Business Administration is a U.S. organization that administers programs and provides support for small business owners. Their services are centered around 3 C’s.
- CAPITAL: They work with about 5,000 banks to provide SBA loans to deserving small businesses.
- CONTRACTS: They work to ensure that 23% of federal contract dollars go to small businesses.
- COUNSELING: They have 14,000 SBA-affiliated counselors for small business guidance.
We’re going to talk about the first C, Capital. If you have trouble qualifying for a traditional bank loan, you may be able to get financing from an SBA program.
The first thing you’ll need to do it visit a local bank or financial institution that participates in an SBA program. Make sure you have met all of the requirements listed on the SBA Loan application checklist. There are about 14 points to cover including a personal statement, projected financial statements, and personal tax returns for the past three years.
The Small Business Administration does not set the interest rate on the loan since that is determined and negotiated between the lender and the borrower.
Once you have the SBA loan and all of your operating expenses covered, you will be surprised at how much you will need to cover day to day expenses. There are several ways to finance everyday expenses and to keep track of your business expenses for tax purposes. One of the best ways to do this is to keep a small business credit card on you for these expenses. That way you can keep all of your business expenses in one place and easily pay them off each month.
For an alternative to expensive bank loans make sure to check out invoice discounting from Hitachi Capital. To celebrate the launch of Inspired Cashfow, enter the SME competition for a chance to win £1M of funding for your company