by Mark A. Wingo (aka Mr. Wingonomics)
Owning a business is one of the many key components to achieving the American dream, in addition to attending college, having a family, a dog, and owning a home with a picket white fence. One thing that all of the above have in common is “Money” or “Financing” to obtain and/or upkeep the American dream. Today we have people starting businesses by the thousands, but to succeed in the business world you have to be willing to build a business. In order to be taken serious in business you must present yourself as a business. We all know that building a successful business requires money. You have many different operational expenses such as: website cost, phone system, computer(s), office lease, office supplies, and a host of other needs. The major expense most entrepreneurs leave out is education. I’m not talking about formal education. I’m taking about informal education. Informal education alone can unlock financing to your dreams. Money is an idea and if you are lacking a vision, you are lacking the finances to run your business like a Fortune 500 company.
Owning a business is nothing to take lightly; small businesses have such a major effect on the local economy. Financing your business or your life is already stressful in this current economic situation, but if you are prepared and willing to change your way of thinking about money you will be a better borrower. Before applying for a business loan and/or grant you should keep in mind the following:
- Business Plan – By developing a business plan, you are providing the company’s background. You are also giving the financial institution a picture of where the company is going in years to come.
- Credit history – Your credit is a written verification of your integrity. Before applying for a loan you should first request a copy of your credit report. If you have credit problems focus on fixing them and get educated by understanding what impacts your credit. In order to receive money you must have a proven credit rating, because they will turn away from the fill even if your business is thriving.
- Budget and other financial documents – You already should be preparing a budget for your business to track income vs. expenses. Financial institutions want to see if you are well organized and that you have a need and/or purpose to use the money in an appropriate way. You also want to have a personal accountant or use financial software to help you prepare the proper balance sheet, income statement, tax return, and other documents to support your business.
- Personal information – This is why I say run your personal household like a Fortune 500 company. Often financial institutions will ask for personal information to see the character applying for the loan and/or grant. You may even be asked to provide personal collateral to secure the loan. If you are not personally stable enough, why would they give you a loan? Your business represents your character!
- Commitment – When applying for a business loan the financial institutions want to see how dedicated you are to your business. They want you to have a passion for your work and if things get tough you won’t seek a stable full-time job. Another great way to wow the bank is to have a well formatted and detailed resume attached to your business plan. This will show your level of commitment.
If you are looking for some reliable information about business loans and/grants you can always rely on the internet. We all know how hard and stressful it can be when making the hardest financial decision, besides buying a home. When applying for a business loan and/or grant you don’t have to be alone. Here are some resources and tools available to assist you in your business journey:
The SBA business planning center in St. Paul offers a mixture of programs and services to help you develop a business plan to present to financial institutions when applying for a loan and/or grant. They also have on-site counseling, volunteer bankers, lawyers and loan information.
The business planning center is free and open to the public without an appointment. They offer free access to computers with software to help you create a business and marketing plan. To learn more about how the SBA can help you attend a free small business loan seminar that is held every Thursday at 12:30pm. There you will receive a sample loan application, a business start-up kit, and information on how to start a business. After the class you can even sit down with local banker to ask questions about your business plan and see if you have provided the necessary information needed to secure the loan. For more information about any of the business planning center programs or services, call (651) 209-1884.
When applying for grant you must also be well prepared to present an almost perfect presentation to the organization, but this process is not as stressful. Today you can apply for grants through a variety contest. One thing I would do is research Non Profits, Chamber of Commerce branches or association groups to see if they have any grant programs available. Every program has its own set of requirements so be sure to read the terms and conditions.
Originally published in the July/August 2010 Issue of Black Twin Cities Magazine.
