If you’re an entrepreneur and ready to apply for funding for your small business startup, there are a few mistakes you’ll want to avoid making so it doesn’t slow down the process. Many entrepreneurs find it difficult to acquire funding for their small business startup, and while it can be quite difficult (depending on your situation), it doesn’t have to be. The key is knowing and understanding how and where to get funding for your small business startup. If you know these two things, you’ll be able to avoid making the following mistakes:
- Being Unprepared – A big part of getting approved for funding for your small business startup (when seeking debt financing) is being properly prepared. There’s a planning process you should implement before approaching banks or lenders to apply for funding. That includes speaking with experts who can educate you on lenders approval criterion. If you know what it takes to get approved, you can properly prepare yourself to meet that criterion.
- Abused Personal Credit – Most lenders will check your personal credit history when you are a brand new business owner. Therefore, you will most likely need to use your personal credit history to get approved for funding for your small business startup. If you have abused your personal credit (i.e. defaulted on various accounts), you will find it difficult to obtain funding from lenders until you’ve been in business for at least one year and generate at least $8,000 per month in revenue (in most cases).
- No Business Plan – Small business startup owners typically need a business plan with a marketing plan and at least three years of financial projections when applying for funding. Some lenders will ask to see a business plan, especially if you have less than perfect credit. Approaching a lender without a business plan is a big mistake that too many entrepreneurs make. To avoid making this mistake, consult with an expert who can help you write a winning business plan. Even if the lender you approach doesn’t require it, you should have it ready just in case.