Will a loan help your project to grow?

Jannie Delucca

We’ve all read the statistic that about 95-percent of new businesses fail in their first year.

The biggest reason is the lack of cash flow or funding. Money – or access to money – is the operational lifeblood of any business. No matter how great your business idea, you’ll struggle in vain without funding.

How can we secure the lifeblood of our business idea? How do we get it from an idea to a profit-earning business?

Just about every single entrepreneur has scratched their head over this very same problem. Should you take out a loan to finance your startup? The simple and straightforward answer is yes.

Bank Loans help businesses grow

The first place most entrepreneurs go is their local bank. This is the traditional place to ask for a loan. Banks have two types of loans available: a capital loan and a funding loan. Before you’ve even set foot in the bank’s office though, you need to have some sort of idea of how much money your business will likely need – and then you can calculate how much you’ll need to repay the bank on the loan.

Using a business loan calculator, you can work out the likely repayments you’ll need to make on certain loan amounts. That will give you a good starting point when applying for a business loan.

Most banks will also offer you specialized Small Business loans to help move your business along its development path. For totally new businesses and startups that haven’t actually opened their doors or begun trading, the banks will not offer you a business loan. The federal banking regulations are strict on this, as people don’t want investors’ deposits serving as loans for risky loans such as these. Only once your business is operating and shows it is generating an income, will a bank take a look at your business loan application. Once you have reached that level though, bank loans range from $5,000 to $500,000 for small businesses.

The bank loan assessor will request to see your startups business plan. Remember, the bank will become a type of investor until you’ve repaid the loan. This is an essential part of your business structure, operating guide, and projections for profitability. There are many online resources you can research for how to craft the perfect business plan.

Using your investments to fund your project

Research all the funding options for your project. If you have the money you wish to invest, that would pave the way for strong yielding returns you can re-invest into your project to grow. For investment tips, be sure to work out the pros and cons of each element of the investment vehicle you are considering.

Funding resources to consider for your project

There are hundreds of business accelerators and incubators that offer to fund and support projects. Find ones that relate to your industry and niche and zero in on applying to them for financial backing to take your project to its next level.

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