When you start a new business, accessing capital is often the first – and biggest – hurdle. But there are some tried and tested ways of working this out. Here, we take a look at some of the steps to follow that can help this.
Mozes Konig – a businessman who some years ago had some problems with Interpol which he then resolved – has worked with many startups and small businesses securing loans. He has gone through a lot of the obstacles with them and is thus able to advise others on avoiding these pitfalls.
“I think one of the most important things to do – before anything else – is making a clear separation between private and business funds. The way you do this is by creating a brand new business checking account,” Konig said. “It just makes things simpler and all monies become more easily manageable. You get a far clearer picture on your monthly expenses, incomings and outgoings as well as a clear visual on payment processes.”
The next thing to do is to choose which type of financing will work best for your needs. There are so many around. Probably the most popular is a term loan (whereby you get all the money in the beginning and then pay back with interest over a set time) but that isn’t best for everyone. For example, some of these require a guarantee like some asset. Sometimes the interest rates are extremely high, especially those with online lenders. It is however a pretty good option for businesses that are not so new to everything and are just looking to expand, not to get off the ground. Obviously it’s important but always good to remind, read the fine print!
Some other options include: commercial mortgage, unsecured business loan, Small Business Administration (SBAs) loans, invoice factoring and merchant cash advances.