 What are some of the ways I can get small business loans for creating a marketing program to build my business?
Of Course This is A Gamble.
Remember the golden rule.
Without strong evidence that your product or service will see significant return on investment given the right kind of marketing solution, you are taking a big risk. However, there are new types of capital that can help to reduce that risk, such as credit card advance, which you should consider.
A Good Loan is Hard to Find
As every small business owner knows, securing a loan is one of the most important and most difficult challenges one will face in the course of business. Even with an exemplary personal and business credit record and low debt-to-equity ratio, no one is ever guaranteed to get a loan from the first institution or investor that they approach, if from any. Even established businesses run at a high risk of being unable to get a loan in a time of need or when looking to expand or renovate. Even if a loan is granted, the borrower might easily find them self facing high interest payments and penalties for late payments which serve to not only worsen the debt but also to lower credit scores and make the entire process more difficult the next time. Having insufficient business collateral may lead a borrower to put up his or her own personal assets, and many have lost not only their businesses, but also their homes.
Types of Small Business Loans
The most common type of small business loan is a term loan, in which a set amount is borrowed from a bank or other institution and interest and principle payments are made every month. If a business has a period of financial difficulty, the payments on this type of loan can become a heavy burden. No entrepreneur wants to face the loss of their personal or business assets. Many businesses fall under that burden, and the consequences of failure to repay the loan promptly will follow those borrowers for the rest of their lives.
Credit card loans are also a common method business owners use to meet expenses. The line of credit is determined by the credit card company, and the business owner makes purchases for the business with that credit card. But just as with term loans, the interest and fees associated with simply using your credit card to fund your business can be very dangerous and any slow or partial payments could have a negative impact on the borrower's credit score for many years to come.
An operating line of credit is an option for some types of businesses, but restaurants and retailers (which make up the majority of small businesses) are not usually qualified. Operating lines are designed to meet fluctuating day-to-day expense needs. The amount of a loan given through this type of credit line is often based on money the business is owed. For small cash and credit card transactions, on which most types of small businesses run, this sort of loan would be very unusual.
 Difficulties and Risks
The level of difficulty in obtaining any of these types of loans can be daunting. After a potential lender is found and the loan application has been submitted, bank officers will take many factors into consideration before the go ahead is given for other bank officers to determine the amount and terms of your loan. Such factors as credit rating, length of time in business, debt-to-equity ratio, available collateral, and personal credit/repayment history will be minutely reviewed before the bank decides if they want to enter into any kind of arrangement with a borrower. You will also be expected to provide a written, detailed business plan, years of personal and business tax returns, a financial statement, and a personal guarantee of repayment; regardless of who will be legally responsible for the debt. The process can take an unpredictable amount of time and can cause major delays to a business that is already in operation and needs funding quickly.
Business owners who have been in operation for a short time often find that they have underestimated costs, or seek to begin expansion or make changes right away, and further find that it is nearly impossible to get another loan until any outstanding debt has already been repaid.
Additionally, the risk associated with multiple loans is very high. Since business collateral has often been used for the opening loan, any additional financing might have to be based on personal assets. Slow payments will increase your debt and make repayment of the principal amount itself much more difficult. Failure to repay can result in the loss of your business and personal property, and the permanent consequences affecting your credit rating will make all future credit applications much more difficult.
Alternative Funding Sources
Government grants are few and far between, and SBA (Small Business Administration) loans are prescribed for such a specific and narrow range of businesses that they can be even more difficult to obtain than bank loans. Private investors are difficult to find, and entering into that kind of partnership carries its own personal and legal risks. Having a cosigner on a bank loan or borrowing money from a friend or family member may lead to benefit in the present, but strained family or personal relationships can be too high a price to pay for funding.
One of the most interesting alternative funding sources available today is the business capital advance. This type of advance is not subject to any interest and has no bearing on the borrower's credit activities. Any type of business that accepts credit cards can qualify. In a business capital advance, the lender gives the borrower an advance on future credit card sales, based on past receipts. Although the advance comes at a financial cost typically higher than that associated with a bank loan, the risk is all absorbed by the lender, thus making the emotional cost much lower. A business capital advance can be a boon to many different types of businesses.
Small business owners and operators struggle daily with the demands of their professional and personal lives. Obtaining funding for a business is the most difficult and dangerous part of operation. The difficulties involved in finding a lender and applying for a loan are very serious, as are the consequences and risks involved in traditional methods of funding. Many owners will want to minimize those risks and consequences by looking for an alternative means of funding.
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