Financing a small business and building it from the ground up can be a real challenge, especially if your credit isn’t the greatest and there’s not much in the bank. As tough as it already is, many small businesses make it even harder on themselves by making a bunch of unnecessary mistakes. Luckily, these can be overcome with some careful planning, and with the help of alternative business lenders.
Avoid These Common Small Business Start-Up Financing Mistakes
Make it easier on yourself to access credit and working capital financing by avoid the following 4 mistakes.
- Neglecting to check the credit of all involved in the business ownership. While many small business owners start their organizations on their own, many involve other parties, even if it’s not 50/50. Even a person who has a 20% stake in your small business should be included in any credit check before applying for a business loan. It’s amazing how many people overlook this detail, yet it’s so important when starting up a company.
- No precise plan for use of the business credit card. Many small business owners tap into the low introductory rates that credit card company’s offer as incentive to sign up. This makes a nice little perk in regards to finance short-term working capital requirements. There’s no collateral needed, and access to credit is always available. On the flip side, however, if no precise plan is put into place for how the business credit card is to be used, you could find yourself depending too heavily on the card for any unplanned expenses. Undisciplined spending on your credit card could hurt your bottom line.
- Not treating investors as well as you should. Investors could very well be the glue that holds your small business together – at least in the early stages. Unfortunately, many small business owners take them for granted. It’s vital to report to them regularly and treat them professionally, even if the investor happens to be a family member or friend. Determine if the money they are putting up front is considered a loan or an investment. If it’s an investment, they are essentially considered a partner.
- Ignoring bad credit. There are plenty of business lenders out there who are willing to offer working capital loans to small business owners who have bad credit, such as Business Credit & Capital. But it’s still in your best interest to improve your credit score as much as possible. The doors of opportunities will open up once you get your credit score up to par. Managing your credit is important, and it all starts with knowing what your current score is and developing a plan to boost it if necessary.
Small business loans are a vital way for many small businesses to start running and operating. While the big banks might give these entrepreneurs a tough time getting approved for a loan, there are plenty of alternative lending options available.
About the Author:
Janice O’Connor is a small business owner who needed some working capital fast to cover some unexpected expenses. A friend of hers recommended Business Credit & Capital, where she got the working capital she needed to carry on her business without a hiccup. If you’re a small business owner who needs access to working capital fast, visit BusinessCreditAndCapital.com today!