Small Business Loans and Grants

As you continue to seek small business loans and grants, again, it is very important a develop a very concise business plan so that you're able to effectively showcase to your funding sources exactly what you intend to the funds while concurrently showcasing the anticipated financial results be over a five-year time frame. Although many institutions require a three-year financial model, as it pertains to the anticipated profits or loss of your business, you should focus on developing a full five-year plan financial model so that are better able to provide more information to the funding source that you're applying to for funding.  With the recent increase in the standards as it pertains to lending and grant funding is imperative that you're able to show more information than less. However, this is does not mean that you should develop a very long winded business plan that that where there is too much information to the potential investor, bank, financial institution, or grant funding institution that you're applying for as it pertains to the funding need to develop or expand your business. Typically, your business plan should range anywhere from 25 pages to 40 pages. Anything above 45 pages, unless you have a highly specific and unique piece of technology that needs to be a program described, is too long for the average reader. Most banks, recommend that you stay within a 25 page to 35 page for the range as you develop a business plan applicable to the type of financing that you're looking to receive.

 

As a further relates to obtaining small business loans and grants, you will need to continually focus on the specifics of the financing that you need in order to launch operations. For many businesses, one of the most important things that you can do if you are capable of doing so is to start a business on a bootstrap budget. This is going to be one of the continued discussions that will have as it pertains to receiving small business loans and grants on an ongoing basis so that you are any better position to receive a more favorable interest rate and favorable payment terms as you progress through your business operations. It goes without saying that for any financial institution a business that is already in operation that is producing a positive cash flow as well as a profit is in a far better standing to receive the small business grants and small business loans that are needed order to effectively expand the business over a significant timeframe. If you are primarily engaged in the business of providing services that may be in your best interest to start the business without seeking a large capital investment up front. In doing so, you'll be will to effectively showcase these current profitability and cash for the business so that they can meet perceived the capital letters needed to expand. This is the most difficult aspects to receiving a business loans as it pertains to a startup business. This is primarily due to the fact, that any start up business does not have a provable profitability or cash flow. If you have more than three years of tax returns available to you then you are an outstanding position to receive the financing that you need from a banking institution or grant funding institution. For many service based businesses, the start costs are typically small. This is especially true if you are operating a professional services practice that is now acquired a substantial amount of equipment. As such, and were able to launch his business on a shoe string budget they will be an outstanding position to receive the necessary financing they were seeking later in your business career rather than seeking the funding that you require now.

 

For receiving small business loans and grants, many financial magicians are going to require that you should provide them with your personal financial statements not only as it relates to your income over the past three years, but also as it relates to the assets that you currently own. This is especially true if you're applying for a small business administration backed loan. With any credit facility, in today's credit climate, you are going to need to personally guarantee the funding that you're looking to acquire from any third party. This includes hypothecating your home, car, private accounts, and other assets that you own in order to effectively secure the financing that unique in order to  continue to build your existing business. As such, many individuals find themselves in a situation where there aren't able to receive traditional bank financing for small business administration based financing simply because that you not have the requisite income requisite assets that are necessary in order to receive the financing that they need. As such, it is imperative that when you apply for a small business loan or a small business grant that you show that you have a significant amount assets beyond the assets that we purchased with the capital that you are seeking. However, it is important to note that the assets that you were seeking to purchase plan that act as the collateral that you need in order to obtain the business loan financing that you are seeking. This is especially true if your business is considered to be a capital-intensive business. For instance, if you intend to develop a dry cleaning business in the substantial amount of tangible assets that you will be purchasing with a capital that you are seeking will be effectively able to provide the bank with the collateral that they need as you apply for small business loans or through grant programs. However, and as we discussed above, service businesses typically do not maintain a very large amount of furniture, fixtures, and equipment. This, however, is what banks are primarily looking for when they make a decision as to whether or not to lend to your business. We strongly recommend that if you're applying for conventional business financing or small business administration backed financing very clearly showcase within your business plan and the collateral that will be used to secure the loan that you need. This includes providing the financial institution, banking institution, or grant funding institution with a list of the specific items that you intend to purchase with the capital that you are seeking. In fact, it may be in your best interest to develop a second document that very clearly showcases to the third-party funding shows exactly what you intend to do with the funds. If you are able to do this effectively, you'll be in a much better position to receive the bank financing or grant financing you need in order to secure the capital for your business. This is going to be one of the many topics that we will continue discuss as it relates to obtaining small business loans and grants.

 

Again furthering our discussion above as it pertains to collateral, you should develop a second document that is considered ancillary to the business planning document that you be were acquired to submit to a banking institution or grant funding institution. Most importantly, you should do your research as to the specific items that you're going to purchase with the capital that you receive. This includes developing a plan that showcases exactly which vendors you intend to use for your government purchases, vendors that you will use for your purchases, as well as showcasing any type of real estate property that you intend to purchase with the capital that you are seeking through small business loans and grants. It is imperative in any instance they were seeking capital to develop or expand your business then you clearly showcase to any third party exactly how you intend to use these funds on an ongoing basis. Additionally, very little of the capital that you are seeking should be geared towards working capital purposes. Many banks as well as other financial institutions have become very wary of credit applications that simply are seeking capital for general purposes and are not specific towards specific purchases. This, again, is due to the fact that banks and other financial institutions as it relates to small business loans and grants want to see that they may be able to recoup their investment in the event that your business does not go as planned. In some of our other articles, we are going to focus on one of the realities of developing a business in that you may face a situation where your business does not effectively work out the way it was planned. As such, it is imperative for you to have built a business plan not only for raising capital but also will happen in the event that the business ultimately fails. This is a very hard concept for many entrepreneurs in vast everyone plans on becoming a successful within their newly developed or expanding venture. However this is simply not the case. In fact, statistics show that up to 65% of new businesses fail within the first five years of operation. However, most business failures are not due to the fact that the business was making enough revenue but rather that the business was poorly managed from the onset of operations. Again we will further discuss the issues as it pertains to ensuring your business is not failed improper management of your business.

 

As an entrepreneur, and as you seek small business loans and grants, you need to be actively aware that your job as an entrepreneur is to focus on taking highly measured risks that will ultimately benefit in your favor for a substantial time frame. The best entrepreneurs, and our experience, have always focused on the substantial the six that are undertaken when developing a new entrepreneurial venture for real estate venture.

 

As part of your business development, it is important that you realize that the concept for you to be business as it pertains to receiving small business loans and grants may not be fully economically viable. This is the most important issues of business planning in that you can ensure that the market that you're operating within to develop a new product or distribute a new product will ultimately provide your business with a profitable result in the long run. As such, it is imperative that you develop your business plan with a specific focus on ensuring that the product that you're selling will ultimately provide tremendous amount of income for your business for a substantial time frame. The most common mistakes is that is made by entrepreneurs, not only as it relates to obtaining small business loans and grants, but also as it pertains to and doing business is that many people neglect to focus on the fact they need to generate a positive income as well as profits in order to receive financing of the need on an ongoing basis so that they can develop and further expand their company for a long term period. Although it may be disappointing from time to time, the development of a business plan, at a relatively low cost may clearly show you exactly how you intend to enter the market with a new product or service that you're offering to the general public.

 

In many instances, the market that you're entering may be saturated with a number of different competitors that already have a very strong foothold in the market that you intend to enter. As such, it may be in your best interest to focus on other entrepreneurial ventures of real estate developments that are able to provide your business with profits over the long run. Again, we strongly recommend that you continue to focus on the bottom line profitability of your business as you seek to develop new ventures especially as it pertains to receiving small business grants and loans for the specific ventures. In our experience, as serial entrepreneurs, who have learned to thoroughly investigate any potential profit venture very carefully through a system of due diligence prior to applying for any small business loans or grants. Many of our future discussions, as a relates to financing businesses as well as developing businesses is to continue to focus on the reality of the fact that not every concept is a good business. This is especially true if you require small business loans or grants as it pertains to your business venture. Banks, financial institutions, and on the other funding sources are going to see primarily that the new business venture that you're looking to start is completely economically viable and will ensure that there investment is repaid for a substantial time for them. This is especially true as relates to banking institutions, in that, they want to be assured that every month that you receive the loan you're taking out will be repaid promptly and on time with the positive cash flows generated by the business. This will showcase through your business plan on an ongoing basis. As it pertains to small business loans and grants, the most important pieces of the financial information that you be required to provide to a third-party is the fact that you are able to repay your loan obligation to on a month-to-month basis solely based on the cash flow analysis of the business. In some of our future articles, especially as it relates to our general business planning articles, then you need to continue to focus on educating you as to the difference between the profit and loss statement as well as your cash flow analysis. For small businesses, many banks and other financial institutions specifically focus on the cash flow analysis of your business in order to ensure that they are going to be oversee where payment as part of your lending contract with the specific financial institution or granting institution they have entered into business. As we discussed before as it pertains to small business grants, there are many stipulations that may be involved, including the repayment period, for the grant that you receive from the federal government, state governments, with private institutions that specialize in providing startup capital to new businesses.

 

If you are unfamiliar with the concept of a profit and loss statement for cash flow analysis then surely recommend it your view and number of different books that out there that can properly educate you as to how the mechanisms of accounting work. In many businesses, especially where we have seen business failures, the most common aspects of why a business has not worked out has been simply due to the fact that the owner of the business does not have a very well versed understanding of accounting and specific more specifically for individual financials to shins and granting institutions want to see as it pertains to providing them with financial statements that will allow them to make an appropriate decision as to whether or not to grant your business with capital. If you are completely unfamiliar with these concepts then we strongly recommend that you buy a number of books and review them thoroughly prior to developing a business plan that is specific for raising capital from a banking institution or an angel investor, or from a granting institution and require you to provide them with a funding plan as to how you intend to use the capital for your business. In doing so, you'll be able to have a much greater understanding of how businesses work as it pertains to generating a positive cash flow as well as showcasing profitability to potential investors, banking institutions, as well as granting institutions.

 

In many of our future discussions, through TheFinanceResource.com portal, we will continue to focus on the issues as it relates to raising capital via small business loans and grants, as well as providing you with in-depth information as relates to our experiences in developing more than 1,600 different business plans on behalf of our clients while concurrently developing more than 400 business plans for this specific website. Again, we cannot stress enough, that your job as an entrepreneur should not be as a risk taker. This is especially true if you're undertaking large obligation was via small business loans and grants. As an entrepreneur, your job is to effectively mitigate the risks that are associated with the business that you're starting. This will again, be one of the themes that resounds through many of our future articles so that you have a greater understanding of how to run a business, how to present an effective business plan to a banking institution or investing institution, and how to keep greater tabs as to how well your company is doing on an ongoing basis. Thank you again for tuning in and we look forward to continuing to provide you with the information they need to effectively develop your business, expanded business, and most importantly receive these small business loans and grants to you are seeking for your company.