If it ain’t broke don’t fix it – that’s the stance banks stand by in their lending criteria because the system they continue to use has worked for them ever since its inception was followed by a few tweaks. It’s a rather rigid system which sees banks lending in a manner which effectively has them taking little to no risks, but for you as the individual who wants to borrow money this isn’t a very effective system.
Try applying for a business loan at a certain bank and then also perhaps try applying for a personal loan. Chances are you’ll get approved for the personal loan if you have some collateral to offer up, even if that collateral comes in the form of full time employment. You can present the most solid and even a proven business plan on the other hand and the same bank will likely deny your business loan request, which should naturally bring up the question of why exactly that is (their risk minimisation criteria). If you can find just one of many answers to that question then you’re well on your way to developing some very creative ways of thinking which you can raise start-up capital for any venture you have, almost at will.
Well one answer to this question is that of banks simply carrying the mandate of entering into deals which will ultimately see them winning, whatever the outcome of the plans related to that deal are. So if you’re going to be buying car and you want financing from the bank, if you can’t make good on your repayments, the bank can auction your car off and recover their investment. This means that if you want to get financed for a business venture, you have to demonstrate to the bank how they could effect an exit strategy which would ultimately have them getting their initial investment back, at the very least and it’s as simple (in concept) as keeping records of some of your existing business practices.
If you’ve previously had experience operating something like a guest house or bed and breakfast and you perhaps want to expand your operation with a new property, something like some specialised accounting software for property management would help you a great deal because it creates a clear paper trail of exactly how money flows and which areas of the business operation you can draw money from to service your debt.
If you really can’t get the primary lending institutions on board, what you should do is try to partner up with whomever it is that has the skills you require to get your project off the ground and completed. Just to make a very simple example – if say you need a website built and at the very moment you don’t have the money to pay a good web developer, you can use some of the savings on processing fees you’d benefit from using a the services of the likes of MerchantAccountSolutions.com together with an offer to give them a share of the profits to get the website up and running, then once the profits start pouring in you effectively pay them their dues in this way.
Often all it takes are just some iterations through the various options you have to partner up with your supplier to uncover quite a few creative ways of raising start-up capital for any venture.