Manage Your Money
Once you are ready to ask for a loan you should be able to answer these following questions:
- What are your startup costs?
- At what level of revenue will your business break even?
- And how does SBA assist new businesses when it comes to financing?
Borrowing money is one of the most common sources of funding for a small business, but obtaining a loan isn't always easy. Before you approach a lender for a loan, it is a good idea to understand as much as you can about the factors the bank will evaluate when they consider your application.
Using Business vs. Personal Finances
Starting up a business can be a tremendous strain on your personal finances. It can take six months or more before your new venture is profitable and can provide financial support for you and your family. Before going into a business, it's always wise to get your finances in order.
Estimating Startup Costs
If you are planning to launch a business venture, it is vitally important to know that you will have enough money to keep it afloat. Every business is different and has its own specific cash needs at different stages of development. There is no universal method for estimating your startup costs. Some businesses can be started on a shoestring budget, while others may require considerable investment in inventory or equipment. Additional considerations may include the cost to acquire or renovate a building or the acquisition of long-term equipment.
Understanding financial statements is essential to the success of a small business. Financial statements can be used as a road map on your business journey to economic success. Using numbers as navigation aids can steer you in the right direction and help you avoid costly "breakdowns." Most business owners do not realize that financial statements have a value that goes far beyond their use to prepare tax returns or loan applications.
Businesses Eligible and Ineligible for SBA Assistance
While the vast majority of businesses are eligible for financial assistance from the SBA, some are not. In general, applicant businesses must:
- Operate for profit
- Be engaged in, or propose to do business in, the United States or its possessions
- Have reasonable owner equity to invest
- Use alternative financial resources, including personal assets, before seeking financial assistance
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