The old adage, Do what you love and you’ll never work a day in your life is the mantra many entrepreneurs use to justify the endless time and energy needed to successfully start a small business. And while their passion and energy may be limitless, most of the time their resources are not. “Many people looking to start their own business find that they need start-up capital, whether it’s for purchasing space, equipment or just to establish a healthy cash flow,” says Geordan Robertson, Meridian’s director of small business. “Securing sufficient credit is crucial for operation and many people find this process to be an uphill battle.”
Robertson outlines the following tips when securing the financing for your small business:
Create a Business Plan
A well-crafted business plan is vital for lenders and it should outline the following: your business idea; how it fits in the current market landscape; how you plan to make profit; and what your start up budget will be. It’s essential that your business plan outlines how much financing you require, what the funds would be used for and when you plan to repay the loan.
Look For a Variety of Financing Sources
Funding is not just limited to financial institutions. There are a variety of government grants and programs that can help a small business get off the ground. A listing of government grants and loans can be found via the federal government’s Canada Business Network at www.canadabusiness.ca.
When meeting with a financial institution to discuss potential lending options be prepared to bring a lot of financial paperwork with you. In addition to your business plan, you should also bring copies of your personal banking records and statements in order for the financial institution to determine your ability to pay back the loan.
Determine Your Borrowing Needs
There is a wide range of lending products available to small businesses from operating lines of credits and credit cards to commercial mortgages. Skilled advisors in this field can help you navigate the options to ensure you pick products that are suited to your needs.
Don’t Lose Hope if Declined
Work with your small business advisor to fully understand why your proposal was declined so it can be strengthened. In some cases, the financial institution may require you to request a smaller loan amount or invest more of your own capital into the business.
Additional information on this topic is available online at smallbusiness.meridiancu.ca.