Tips for Finding Small Business Start up Loans

You have a solid idea, but not enough capital, and have decided you need small business start up loans to get your business off the ground. But where do you find start up loans? How do you evaluate these loans? How do you make sure you can pay back any that you take out.

First, the basics: here are 8 tips for finding small business loans:

1. Are you a female entrepreneur? If so, there are start-up loans available for your small business.
2. Entrepreneurs who are minorities can also benefit from specific small business loans.
3. There are also specific start up loans targeted to businesses operating in low-income areas. Check out The Opportunity Fund and look on the Internet for start up loans targeted to helping the economy in your community.
4. The federal Small Business Administration (SBA) is another excellent source of loans for small business that are just beginning. The SBA can guide you in finding out if you’re eligible for a start up loan, choosing small business loans, and even in finding and applying for grants instead of small business loans which have to be paid back.
5. Consider asking your friends and family for start up loans. Entrepreneur magazine advises treating small business loans from friends and family just as you would treat loans from a bank or the government. Have a realistic plan to pay back the loans you receive from friends and family, and make sure to put those plans on paper.
6. Or course, you can also secure small business loans through referrals by your friends and family. Again, treat these loans as you would a loan from an “official” lender. After all, these particular small business loans came to you because a friend or family member was willing to risk their capital on your behalf.
7. According to Entrepreneur magazine, suppliers and customers can also be sources of small business start up loans for your company. However, be careful when applying for start up loans from your suppliers, because doing so may block you from using your suppliers’ competitors.
8. “Angel” investors are another source of loans. According to Entrepreneur magazine, you approach angel investors with a business plan and pitch for a small business start up,they then issue a loan, and they expect their return in 5-7 years.

Even in today’s economy it’s possible to get one or more small business loans to get your new business moving. You’ll need to be creative in seeking out sources of start up loans. And, of course, you’ll need to plan carefully to be sure you’ll be able to pay back those loans when the time comes.

It also helps to look at the potential in a recession economy. Small businesses will play a huge part in the economic recovery because they generate so many jobs, making small business loans a good investment in the larger community. Small business loans are also a good bet for community banks because of the relationships that develops between the business owners and the bankers who hold the small business loans. So don’t be discouraged if a national bank in your area is being stingy about loans. Other sources of small business start up loans are available.