Kentucky and colleges resource


Three C's - What Startups Need to Get a Business Loan, Part 1

You want to get a good, solid overview ofyou have any assets that can be pledged
what it takes to acquire that business loanagainst this loan in case of a default?"Him:
you need, especially if you are a startup."Default?! Good grief, man. Can't you tell by
The essential element of what the lenders outlooking at me that I'm a man of my
there require of you can be wrapped up in theword?!"You: No.At this point, he leaves your
acronym, C. C. C. These are...Cash - Decidepresence discouraged, fuming, or both. No one
how much money you want to borrow, what itin his right mind would fund such a proposal
will be used for specifically, and how muchat face value. On the other hand, if that
you personally will put down on the loan. Thesame man came to you (and you were in the
more cash you can come up with the better,business of lending money), laid out a
period.Credit - Your personal credit scoresensible business idea, put up 20% of the
really should be 700 or better. Unless you'veloan amount in cash, had good credit, had
got tons of cash and collateral, don't evenexperience either at running a business or in
attempt a loan request until it is. Personalthe industry he was proposing, and had a
credit reports can often be obtained free andsufficient amount of collateral to cover
securely over the internet.Collateral - Thelosses due to unforeseen circumstances, you
more collateral the better. The lender willmight consider him a "good risk", wouldn't
establish a loan-to-value on all of it.you?All lenders have the difficult task of
Having a house to pledge is a huge plus. Keepmaking future decisions based on historical
in mind, though, that little or no cash andinformation. Commercial or private lenders
lousy credit will not be made up for by ansuch as commercial finance companies, leasing
excess of collateral.You must decide how muchcompanies and mortgage banks, though not
money you need and how much you can raise fordirectly regulated by the government, still
a down payment. You must get working to makemust adhere to certain credit granting
that credit score of yours better. You knowcriteria. Institutional lenders such as
how many assets you have, and should find outbanks, credit unions, savings and loans,
what their liquidation value is. You need toetc., lend money obtained by borrowing from
discover how to get your hands on additionaltheir depositors. Thus, they are both
cash and collateral should the needregulated by the government and more critical
arise...Still with me? Good. If you arein their policies regarding lending.
serious about starting or enhancing yourRegardless of whether you approach one or the
business through a loan, you need toother, neither one of them are in the
understand that lenders will want to know howbusiness to lose money. Give them reasons to
much skin you have in the game. After lookinglend to you. Did you know that lenders want
into a loan possibility, many aspiring andto provide money to you? Let them!By
existing entrepreneurs conclude that thepreparing your personal three C's properly
money lending industry is too demanding andfor the scrutiny they will endure, you'll
complex, and the sheer volume of informationgive the funder a good opportunity to fulfill
required by them is overwhelming. Then,your request for business startup capital.
discouragement sets in and drains all theThere are many other details involved in the
excitement and enthusiasm out of them.Butprocess, such as the sizeable amount of
perhaps it's prudent to think from thepaperwork you need to prepare and gather.
lender's perspective for a moment. Imagine aBut, if you're serious and confident about
stranger approaches you, nicely dressed andyour venture, pony up and be willing to
polite, and proceeds to enlighten you on hishurdle the necessary fences to satisfy the
idea to build a lovely espresso stand justlender's requirements. At that point, an
down the street from your house. His visionindependent loan broker will be one of your
of the success of this venture is optomistic,most valuable allies. Contact a professional
he apparently has a little experience atwho can walk with you through the process and
running coffee joints, and is now inquiringexplain the details of the transaction. Your
if you would like to fund the constructionchances for approval will become greater and
and initial operation of this hopefulyour lender will thank you.In part 2 of this
enterprise.So, naturally you begin to be aarticle, we will examine the types of
little inquisitive...You: "How much cash willpaperwork necessary to package a startup loan
you have on the line for this project?"Him:request to the lender.Mark Uptain is the
"Cash?"You: "Yeah, you know..., money? And,owner of Regent Business Capital, a loan and
since I'm asking, how's your credit? Have youlease brokerage that works with lenders
been making all of the payments to yournationwide to help small and medium-sized
creditors on time?"He begins to squirm.Him:businesses get financing. His website offers
"Well..., about the money thing, I wouldn'tfree equipment leasing information and
be coming to you if I had any of my own. And,competitive quotes to businesses throughout
as far as my credit is concerned, it'sthe United States.
happens to be pretty good...I think."You: "Do



1 A B C 45 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95