Comments on: Qualify for a loan without a financial history http://smallbusiness.blogs.cnnmoney.cnn.com/2008/01/08/qualify-for-a-loan-without-a-financial-history/ Editors from FSB magazine answer your pressing small-business questions. Tue, 15 Dec 2009 12:52:55 +0000 http://wordpress.com/ hourly 1 By: Heath Nichols, Boca Raton, FL http://smallbusiness.blogs.cnnmoney.cnn.com/2008/01/08/qualify-for-a-loan-without-a-financial-history/#comment-563 Heath Nichols, Boca Raton, FL Thu, 24 Apr 2008 18:58:12 +0000 http://askfsb.blogs.fsb.cnn.com/2008/01/08/qualify-for-a-loan-without-a-financial-history/#comment-563 Procuring a loan for a new business that doesn't have a track history of sales is easier said than done - but take the right steps - and your business will be up and running before you know it. First and foremost, we need to understand that lenders will base all decisions on credit, collateral and your business plan. Capitalizing your company on a credit basis first will allow you to grow without having to provide collateral to accomplish your goals. Having this as a backup may be essential when it is time to take your business to the next level. At the start, there are three different ways to go about getting the capital you need. Depending on what you have and what you need will determine which way you decide to go. The first is to use your own personal cash or credit. If you have it on hand, then by all means, use what you have to get your idea off the ground. Try not to overextend your credit in doing so - since it will affect your personal credit score along the way. This could make it difficult down the road to grow your business. The second way is to apply for a business loan through your local SBA lender. This generally requires a solid business plan with projections, experience in the industry you are starting your business and a 640 credit score. Depending on what is needed for your business, personal assets may be a requirement to secure a portion of what the lender will lend to you, so you may want to consult with someone who has experience before applying. A co-signer may be needed! The third way, depending on your business plans, is to take on an investor. This is a decision you would have to heavily consider if the first two options are not available, since you aren't taking on debt for this option - you are taking on an equity partner. This could affect your business plans, but with some negotiating, you may very well get what you need to get started and everyone wins. By taking assessment of where you are now and where you want you want to be, you can make an educated decision for your new business. Procuring a loan for a new business that doesn't have a track history of sales is easier said than done – but take the right steps – and your business will be up and running before you know it. First and foremost, we need to understand that lenders will base all decisions on credit, collateral and your business plan. Capitalizing your company on a credit basis first will allow you to grow without having to provide collateral to accomplish your goals. Having this as a backup may be essential when it is time to take your business to the next level.

At the start, there are three different ways to go about getting the capital you need. Depending on what you have and what you need will determine which way you decide to go. The first is to use your own personal cash or credit. If you have it on hand, then by all means, use what you have to get your idea off the ground. Try not to overextend your credit in doing so – since it will affect your personal credit score along the way. This could make it difficult down the road to grow your business. The second way is to apply for a business loan through your local SBA lender. This generally requires a solid business plan with projections, experience in the industry you are starting your business and a 640 credit score. Depending on what is needed for your business, personal assets may be a requirement to secure a portion of what the lender will lend to you, so you may want to consult with someone who has experience before applying. A co-signer may be needed! The third way, depending on your business plans, is to take on an investor. This is a decision you would have to heavily consider if the first two options are not available, since you aren't taking on debt for this option – you are taking on an equity partner. This could affect your business plans, but with some negotiating, you may very well get what you need to get started and everyone wins.

By taking assessment of where you are now and where you want you want to be, you can make an educated decision for your new business.

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