Navigating Financial Decisions of Owning a Small Business

Owning your own business can be a fun and exciting career choice. After all, who wouldn’t want to be their own boss? The satisfaction of building a successful business from the ground up is hard to rival. Then again, like anything worthwhile in life, the responsibilities involved can be challenging. Being the boss means making difficult decisions, and the financial needs of a small business can pose hurdles that require extensive thought and planning.

Luckily there are ways to help your small business navigate the market and overcome any challenges it faces. Whether you’re searching for funds to keep your business moving, small business loans can be a lifesaver.

The first step is figuring out exactly how much money you need. Accuracy is important, especially when it comes to money you’ll have to pay back. Keep in mind all the expenses your loan will be covering and draft up an estimate.

Before you begin searching for a loan, figure out how you plan on paying it back. Lenders want to avoid risky investments, so having a repayment plan that involves financial statements and cash flow projections can go a long way to helping you secure the money you need.

Choosing the right lender is vital when seeking out a small business loan. You want to set up a bank account at a financial institution that is capable and experienced in dealing with small businesses. By opening an account and showing that you’re an exemplary customer, it will be much easier to build a relationship with your lender. Keep your account in order, taking special care to avoid overdraft fees, bounced checks and low balances. Finally, take the time to get to know your lender personally. Good financial history and personal rapport can go a long way in smoothing out the lending process.

When it comes to obtaining your small business loan, you don’t have to rely solely on large banks. Just as you would when getting a personal loan, finding the terms that fit you best is more important than where you finance your loan. Credit unions can be just as beneficial to small businesses as banks.

The Small Business Administration, or SBA, is a United States government agency devoted to helping small businesses. For small businesses trying to find a loan, the SBA can be an invaluable resource. While the SBA doesn’t loan money itself, it does partner with different financial institutions by guaranteeing loans, making it easier for small businesses to obtain them. If you own a small businesses and are finding it difficult to secure a conventional loan, it may be worthwhile to speak with your lender about the SBA and if they offer SBA loans.

There are different types of SBA loans, each one tailored for businesses with different needs. For instance, the SBA microloan program allows small businesses to borrow up to $35,000 for financing business growth concerns. The type of SBA loan you try to qualify for will determine which lenders from which you’ll need to must borrow.

Qualifying for an SBA loan is very similar to qualifying for a conventional small business loan. While the SBA may make it easier for you to qualify, the organization will look for the same things as financial institutions: repayment ability, cash flow, financial history, management, collateral and equity. Bulking up your small business bona fides through responsible business decisions and good credit is key to getting a small business loan.

Whether you’re searching for start-up capital or funds to keep your business moving, small business loans can be a lifesaver.

About the author

David Doria is VP of Small Business Lending with Mountain America Credit Union. Mountain America Credit Union has 75 branches in five states and offers a variety of financial products and services for consumers and businesses, including savings accounts, auto loans, checking accounts, mortgage loans, business checking, SBA loans and retirement options.


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