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Funding Your Business with Loans and Grants

Running a business requires capital, without adequate finances it is impossible to run a business. There are many ways to finance your business. Banks and private financial institutions offer loans based on credit ratings, nature of business, balance sheet, assets and liabilities. There are government aided loans and private finance companies that offer business loans.

Funding your business

Looking for funding your business, business loans are the right resources. Business loans fall under commercial loans and it can be categorized into short term, long term, intermediate and line of credit loans.

Short term loans are usually for a period of less than one year. This is apt to procure interim working capital. Long term loans are for developing infrastructure or acquiring new assets. Anything that ranges more than a year can be classified as long term. Interim loans are for start-ups to buy new equipment, working capital and expansion plans. Line of credit allows you to borrow money repeatedly up to your credit limit. The limit can be increased based on the financial health of the company.

How to apply for small business loans

Applying for a business loan is easy if you have all the documents in place. All that is required is to prove to the lender your business is capable of repaying the loan. Online could be the right place to start your search for the right small business loan providers. All that is required is to sell your idea to the banker. Build a strategy that the lender will not be able to reject. Doing some paperwork like preparing a financial statement and cash flow charts can help the lender understand the business model better. Your income and expenses source is called a financial statement; this can include assets and liabilities. Balance sheet is the net worth of your business. Future balance sheet will be an added advantage. Profit and loss statement can give a summary of your sales revenue. Cash flows include net income, capital versus expenditure. A forecast of cash flows could again be beneficial. Credit worthiness is another factor that a lender would always look out for. Past loan statements, credit record, work history, references can do wonders while applying for a small business loan.

How to apply for small business grants

Federal, state and local governments offers assistance for start up business in the form of grants. Low interest loans, scientific grants, venture capital and other development grants are some of the type of grants offered by the government. These grants are available to projects that are aligned to the welfare of the nation. These include renewable energy, job creation, medical research or network security. Remember that grants are not given casually and business requires fulfilling a lot of eligibility criteria. Federal grants are offered to specific industries that are identified by the government. If your small business is involved in R&D then grants can be made available under the Small Business Innovation Research Program. Grants are not offered for starting a small business or covering operational cost or paying off debts. If you are thinking of free money from government to run your business, it may not happen. There are advanced tools available online to check out if your business is eligible for a grants and how to apply for these grants.

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