A Brief Look at Business Loans

A Brief Look at Business Loans
Copyright © Jose Love


http://www.yourescape.2freedom.com

The first stop for most young entrepreneurs is the

procurable of a business loan from the local

lender. There are several types of loans readily

available for the small businessman who has all his

ducks in a row, and a business plan showing that he

or she knows what they are getting themselves into.

Banks and the Small Business Association are not in

the business of charity, though funding small

businesses is seen as something more substantially

social than a personal loan with high interest

rates. For someone with a college degree, some

substantial collateral, and a smart business plan,

getting a loan should pose no problem. Here are

some of the loans available for the small

businessman.

Micro loans are the smallest category of these

business loans. The cutoff for a micro loan is

usually $35,000, and they typically require a

certain pedigree of training and other requirements

before the banks and/or SBA parts with their money.

Micro loans always require collateral of some kind

as well as a personal guarantee from the lender.

The Small Business Administration has their own

lender programs, and is the first place to look for

many aspiring small businessmen. They offer a

variety of loan guarantee programs, each of them

with their sets of requirements and collateral, and

each reaching various heights of maximum lending.

It is important to note that the SBA does not

actually lend money itself, but rather offers

programs intended to help the small businessman

secure a loan from a bank or otherwise authorized

lender. SBA loans vary in their requirements, but

most of them require at least that the small

businessman himself has put some of his own money

into the venture. They see this as a positive sign

of good faith, and also see it as likely that the

individual with his own money at stake will do all

that he can to see a return on his investment. They

usually require a strong and sharp business plan as

well. These plans show lenders that you know what

you’re doing and have set some specific financial

goals for the future of your business. Good credit

is also a must for getting into the SBA loan

programs.

Franchise financing is what the potential

franchisee will want to look into. These loans can

be easier to secure than traditional,

start-from-scratch business loans. Most franchises

have an established history of profitable business,

and the larger ones have a set path for making

money in just about every conceivable scenario.

Many times the franchise company itself will put

forth money for the loan, encouraging young

entrepreneurs to get into the business, which

benefits both the company and the small

businessman.
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