Often, aspiring entrepreneurs find themselves in a need for money to make their ideas a reality. Contrary to perceptions, a successful startup takes a lot more than just a great idea, and most of the “lot more” part revolves around the M word. Business Loans without personal guarantee are one way out for such people.
One of the prime mistakes that most entrepreneurs who get grants from venture capitalists tend to commit is – spend all the money in the setup process. Resultantly, they find themselves looking for their second round of funding even before they have started functioning as an organization. A small business loan is something that can come to their rescue, but without any personal guarantee against which to borrow, it can be a tough nut to crack.
Since banks and financial association would not care much for your past records with other businesses, you need to give them something concrete to rely on. Even with a great business plan, and an amazing idea, it is very tough to convince the establishments to extend credit for your business, especially when you have just started out.
If however you do manage to convince a lender to give you a loan for your business, there are certain issues that you must be very clear about. Make sure to get your Employer ID Number (EIN), which shall act pretty much as an identification code for your business. Mark clear boundaries between your personal finances and those of your enterprise. Unsecured personal credit may be granted, which you can use for your venture. However, it is safer to demarcate the two, so that if the ship of your business sinks, you don’t go down with it.
Another great option to look for money is to apply for a business credit card. Several investment groups grant you cash advances if you agree to subscribe to their credit card services for a stipulated minimum duration. A business credit card also helps you meet most of the smaller payments, though using it solely as your finance resource is not advisable. Getting such loans is easy and quick, and some groups even provide emergency funding within 72 hours.
Your suppliers’ firms maybe a great place to look for business credit. Most established suppliers provide small business financing and allow entrepreneurs to operate on credit for a while. However, establishing a good rapport with them is essential to receive this favor from them. List your business with the three major credit agencies, namely EquiFax, Dun & Bradstreet and Experian. Obtain a trader supplier account with your associates.
Once such accounts and a few credit cards are in our control, you gain a level of credibility with the finance companies you might approach for further loans. Be firm about separating personal credit from business credit. Remember, a bad personal credit can cast a gloomy shadow over your business prospects. Business Loans without personal guarantee can be tough to obtain, but they surely are your best bets in taking your venture to higher levels.