Startup Business Loan

startup business loan

You might have a brilliant idea, but converting it into a lucrative business venture is not easy and all small business entrepreneurs will swear by it. Winning a startup business loan is a dream, all first time entrepreneurs cherish. Considering the fact that a majority of startup ventures breathe their last in matter of 2 years from their inception, most financers are wary of providing startup business loans. Most consider startups to be risky ventures and avoid blocking their reserves through startup business loans. However, most small business entrepreneurs consider their ideas to be extremely coveted ones. They appreciate the importance a startup business loan, without which their priceless ideas will have no future.

Most startup business professionals are extremely optimistic though. They try to leave no stone unturned for achieving their desired goal. After all, most successful businesses of today stemmed from such inspiring startups! Even though winning a startup business loan may seem a Herculean task at the outset, there is surely a way to approach financers which could ensure partial success, at least. There are some basic steps to follow at the outset, which would set the right tone for developing a trustworthy relationship with your prospective financers. Remember, a single flaw at the inception stage might ruin your chances of acquiring your precious startup business loan.

First, remember that its you, your financers are getting to know in the beginning. Your idea and business acumen comes later. Since it’s a startup, you will probably not have an operating history of your organization, which they can refer to before granting the startup business loan. So, they would naturally assume that you would be handling your business resources the same way in which you manage your personal finances. In order to be trusted, make sure you carry your personal credit history with you. The report will act as a statement for your character and could assure your financer before they consider granting you a startup business loan.

Second, before providing a startup business loan, every investor would want to study the financial projections and fund allocation details of your business, in order to understand the commercial viability of the project. You need to explain to them how you would be utilizing the amount of the startup business loan, to their benefit. You must also have a fair idea of profit projections which would inspire investors to offer loans for your venture. Keep in mind, never to put forth improbable rosy business statistics. Your projections must have solid research backup and should also be justifiable. Inflated data may also send waves of doubt into your financer’s mind. He would then be doubly cautious before granting you a startup business loan.

Third, and probably the most crucial part of your proposal is your business plan. Banks or other financial institutions always ask for a detailed business plan before they consider giving you a startup business loan. Your business plan must cover all aspects of your startup down to the minute detail. You need to elaborate on your sales and marketing plans, research and development initiatives and future prospects. The business plan must also have the complete bio data of you and your partners (if any). The past experiences of your partners should also be provided in great detail. If possible you must also provide the personal credit reports of your partners for verification. All these things will instil faith in your financer and would help in winning the startup business loan.

Once the documentation is prepared, its time to identify financers for your startup business loan. Since you will be divulging your personal and professional details anyway, the best place to try is your own bank. If you have been a responsible customer and a credit card holder of your bank with no history of defaulted payments, this could be one of the best places to start looking for a startup business loan. If you have mortgages with the bank, your chances of landing a startup business loan are even brighter.

If the bank thing does not work out target some angel investors for your startup business loan. Angel investors are typically high net worth individuals who invest their resources in new and innovative ventures, in their inception stage. Angel investors are particularly interested in investing in startups or small ventures because of primarily 2 reasons. First, they do not have as much cash at their disposal as compared to the huge reserves of venture capitalists. Secondly, they prefer investing in several small ventures at one time, rather than pining hopes on a single huge venture. Therefore they could be ideal for granting a startup business loan.

If you happen to get an able and experienced angel investor on board, there are plenty of other benefits you might also enjoy. Angel investors can prove to be true angels for your business. They are known to be completely attached and involved with your business processes. They can provide some very important inputs, suggestions and information which might prove to be extremely useful to you. So if you happen to target an angel investor successfully for your startup business loan, you also get an advisor for free. The chances of success for your startup brighten with the involvement of an experienced angel investor.

But where would you find angel investors? Angel investors are often part of networks and platforms which provide them access excellent business opportunities. You can be a part of these platforms and put forth your proposal. Chances are that some angel investor or the other will pick up your idea and agree to offer a startup business loan, for the same. You can also check with some angel investor directories and contact ones who stay in proximity.

Landing a startup business loan may be challenging task, but your efforts can actually make it simple. If your idea has juice, there will be not dearth of financial help and support and your startup could be a rocking success, which could set an example for many wannabe entrepreneurs of tomorrow.