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Business Startup Loan – Negotiations, Thieves, and a Pot of Gold
Small business startup loan, lets keep this simple. If you are trying to get a larger loan (one over $100,000), then you will probably need collateral. You probably already knew that. But what you may not know is that for some smaller loans, you may be able to get by with several other alternativeshome equity and unsecured loans. You may even be able to negotiate your accounts receivable as a form of collateral if none of the other options work. The government provides several programs to help you as well.
USE THE MONEY IN YOUR BACKYARD
If you have no collateral and your lenders require it, you may be able to convince them to use your home equity as collateral. This should be exciting news for all of you homeowners that are starting businesses with less than sterling personal credit. However, this tactic will not work if you have already borrowed significantly against your home equity.
TAKE THE THIEF APPROACH (LIKE BANKS DO)
You may not understand why you need collateral for smaller small business startup loan amounts when you are already paying interest for borrowing the money. This is a perfectly good question. And the answer is simple: for small amounts, they dont. So either find a lender that provides unsecured small business startup loans or convince traditional lenders to give you money without requiring collateral. If you are looking for $15,000 or less and your preferred lender will not do the deal without collateral, make like a thief and run (to the next lender.) Just dont do anything illegal on your way out.
TAKE THE MONEY FROM YOUR CUSTOMERS POCKETS
Instead of trying to use assets you dont have, try using the cash that customers already owe you. Some banks let businesses use accounts receivable as a form of collateral instead of real estate or other assets, so if your banks primary objection is your lack of collateral, negotiate to see if they will accept accounts receivable. This may reduce the amount a lender feels comfortable providing, but any number is better than zero when you are desperate.
CALL YOUR UNCLE SAM
If all else fails, ask lenders if they can distribute SBA funding. The 7(a) Guaranty program can help allay their doubts for larger small business startup loans, and the Microloan program can help for start up loans. You must qualify for these programs, so do some research about the SBA loans to make sure you are eligible. Be aware that even if you qualify and are approved for an SBA loan, banks can still choose not to loan money to you.
Some states have grant programs to foster business growth. Consult your local chamber of commerce for information about those or use the internet for additional information.
DONT GIVE UP
If you are completely out of options, keep a positive attitude. Learn from your mistakes and do everything in your power to correct them as soon as possible. If you do this, the small business startup loan check will appear in your bank someday. In the meantime, maybe one of your family or friends will decide your business is great and provide some funding. You never where a pot of gold may be hidden!
Filing for bankruptcy can be the first step to restoring your credit
So, a Fresno bankruptcy can actually start you on the way to good credit? This is a critical question to ask your Fresno Bankruptcy Attorney. First of all, you need to understand that the old adage: “the bigger they are – the harder they fall.” Comes into play here.
If your credit is in the 700’s or higher. It is true that your credit is going to take a significant drop after filing for bankruptcy. However, most people that file bankruptcy have been struggling to keep up their payments for a long time. So their credit is already in the 500’s or so.
The way credit companies rate your credit has to do with the high balances you carry on your credit cards and how many slow pays that show up on your credit report. Once you file for bankruptcy, the balances are wiped to zero and the credit companies can no longer report any late payments.
So your credit slate has been wiped clean. Typically a person will see a big drop in their credit for a short time, but as you start to make smart financial decisions your credit will begin to grow. Your late payments no longer appear and you don’t show high balances.
People often receive an offer for a credit card within 6 to 9 months of filing for bankruptcy. Of course the rates are very high. If you choose to to accept a credit card, be careful! Only use the credit card for gas and incidentals and pay it off every month.
After a year or so, you’ll be able to purchase a car on credit. But don’t run out and purchase the car of your dreams. Look at that car as a credit tool. Buy a car that represents very affordable monthly payments that you can pay off in three years. Remember, this car is not your dream car. It’s a car to get you back into the American Dream. It will help you re-establish credit.
In conclusion, people often ask if bankruptcy will ruin their credit. The true fact is, most people already have bad credit and the quickest way to start a new credit life is through a thoughtful bankruptcy.
Obviously, each person needs to make the decision to declare bankruptcy with caution and with sound legal advise. We suggest you contact a Bankruptcy Attorney in Fresno to explore all of your options.
You can contact the Winter Law Group at