It can be quite intimidating starting a new business. You started out with a great idea and big dreams but turning it all into a reality is a lot more complicated than you feared. Somewhere near the top of the list is wondering how you’re going to find the money to get the ball rolling, and while (as you’re about to see) it doesn’t have to be complicated, it can be intimidating.
However, if you follow the series of steps outlined below, you might not find it quite as scary as you thought, and once you have your funding in place, all of the other steps on your path to getting your business off of the ground should fall into place more easily.
#1 Work out how much you need
This is important. There’s little point in just plucking a number out of mid-air and hoping you’ll get it; banks are typically risk-averse when it comes to new start-ups, especially in the current business climate.
You’ll need to put together a business plan outlining all of your start-up costs, and importantly, the point at which you see your business being profitable. Well researched figures and projections using accounting software and your research will go a long way to getting the correct funding approved.
#2 Check your credit scoring and get your paperwork in order
Any lender is not going to go on the strength of your business plan alone, though. Before they can loan you any amount of money to fund your business, they usually need to undertake due diligence and ensure you (as well as any business partners) are who you say you are.
For that reason, it might be an idea to polish up your credit rating and ensure you have the right identity documents (passport, birth certificate, driving license, household bills in your name, and tax returns) before you apply. Remember, not having any of these can cause delays and could lead to your application being refused.
#3 Find yourself the best possible terms from the right lender
As you may have guessed, this isn’t going to be as simple as walking into the local bank and completing the paperwork. While your bank might approve your business loan, they might not be the best people to go to.
As previously mentioned, banks are quite averse and may put restrictions on your funding or charge a premium for the funding. An alternative to this is to source funding from specialist lenders who might understand your business far better than they would on the high street.
Companies like biz2credit.com have emerged to put the right lender together with the right business. This mutual understanding can lead not only to a good ongoing relationship but also better rates than you might find from somebody who doesn’t ‘get’ what you want to do.
This article is by no means a complete list, but it does cover the essentials and provide a starting point for more in-depth research, and hopefully eliminate a few of the headaches you imagined when it came to sourcing funding for your business.