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One of the most important things to learn when starting your new enterprise is how to get a loan to start a business. Obviously the current recession has made things a little more challenging in this respect than they were, say, several years ago, but nevertheless options are still available to savvy entrepreneurs.
The first tip is knowing where not to go: large banks. The giants of the financial industry may look glamorous, but they like to cater to established businesses with lots of assets and good credit. If you don’t meet their strict guidelines, you will be unable to speak to someone that has an executive leg in the decision-making process and not qualify for a loan. This is not how to get a loan to start a small business. Instead, you may want to try smaller banks and credit unions to see what options are available. Usually you will be able to meet with somebody that has some say in the loan process and will be willing to work with you if your idea is a good one. In addition, small banks and credit unions also have more competitive interest rates due to the relative lack of overhead and, in the case of credit unions, the lack of profit.
The banks also offer Small Business Administration (SBA) loans. The SBA is the nation’s largest backer of loans, with a portfolio worth $45 billion. The SBA provides special loan programs to the disadvantaged, women, minorities, veterans, and has a wide variety of start up loan programs as well. See which of these you can apply for, and it will help you immensely in your search for capital.
You may want to consider P2P lending as well. Although somewhat antiquated, P2P lending has become much more sophisticated in the recent years thanks to the information age. One of the most interesting sites available is virginmoney.com, which enables you to conduct loan transactions with friends, family and associates in a professional manner.
It would also be wise to associate closely with other professionals. Find out what kinds of business associations are available in your local area. They will be able to give you excellent personal tips on how to get a loan to start a small business.
