You should learn how to locate, negotiate for, and maintain sources of money to help you start and expand your business.Money makes your business go. But don’t try going to a bank to get it when you’ve just started in business. Banks normally extend business credit only to businesses with operating histories. A banker’s primary concern is your timely repayment of loans. The fuel to make loan payments come from your cash flow.
As money of the life blood of any business, a business owner should also consider tapping on personal loans offered by financial institutions. The search for personal loans to finance business usually starts with having a good credit rating.When searching for business credit, you are most likely familiar with a straight loan where the lender gets an interest rate and fees, but there are also equity financing, where the money raised gives the investor an ownership interest.
This is common in the sale of stock to a limited number of investors or participation by venture capitalists. Sometimes such a discussion on equity financing arises with friends and family who want to be your partner. Consider this carefully because they will then participate in the increased value of the business and have voting rights.Business owners have a wide variety of options when it comes to searching for business credit.
But be mindful that the terms of each business credit extended will vary considerably from lender to lender; important issues to consider:As a business owner, you will be legally obligated to have individual responsibility for the credit obligation of your business.
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