Starting a business is difficult for many different reasons. Financing is the lifeblood of your business, but you are not going to get money for your business without a solid plan. If you are planning to get financing from a local bank or credit union, then you are going to need to plan out your approach ahead of time.
First, you will need a business plan. A business plan sets everything out for the lender, including market research – who will buy your product and why, why there is a need for your product or business, projected costs and an estimate of sales and income.
Lenders will want to know more about the “Four C’s” of you and your business.
The four Cs are:
- Cash Flow – how much money you will have available to make payments on your financing;
- Character – your credit rating – which lets the financing company know your financial habits and history of how you handle debt;
- Commitment – how much of your own money that you plan to invest. You will never be given a loan unless you come up with a substantial amount of money on your own
- Collateral – anything of value that you are will to offer to the financing company that they can take if you happen to default on your debt obligations.
Take the time to create a professional looking business plan.
There are plenty of resources that can assist you in writing a really good business plan, you just need to be diligent and put effort into the finished product. If your plan is half hearted, don’t expect banks to be interested in giving you money.