There are a few basic things that any entrepreneur needs to run a business, like time, lots of hard work and commitment, to name a few. Another universal need that shouldn’t be overlooked is money. Entrepreneur business loans can take a fledgling enterprise to higher ground. That’s why a recent survey of small business owners conducted by the Federal Reserve Bank of New York showed that almost half of the respondents (43%) plan to seek out new financing options this year.
To get the funds necessary to keep your business moving forward, you’ll more likely need to secure a loan such as an entrepreneur loan or a small business loan. However, there are many obstacles that could get in your way of obtaining the all-important funds you need.
Here are a few common ones and what you can do to overcome them:
Your Credit is Too Low
When you apply for entrepreneur business loans, your lender will check your personal credit report to make sure you’re a trustworthy borrower with a track record of paying bills on time and not carrying more debt than you can handle.
If your credit score is too low, however, the lender may decide you’re too much of a lending risk. Maybe this is an accurate assessment, and maybe it’s not; in any case, you’ll need to find a way around this barrier.
For the short term, try seeking financing elsewhere. Alternative lenders that offer entrepreneur business loans typically are more lenient for low-credit customers because they understand there’s more to the story aside from the three digits of your credit score.
For the long term, you can work on building up credit so you’re more eligible for funding later on. Start by paying your bills on time and getting rid of any outstanding debt. Once you’re able to demonstrate that you’re a fiscally-responsible business owner, lenders will be a lot more enthusiastic about offering you an entrepreneur loan.
You Don’t Have Enough Industry Experience
Traditional lenders generally like to see at least five years of successful industry experience before extending small business loans for entrepreneurs. Of course, it’s hard to get this experience without growing your business, and it’s hard to grow your business without money.
If you run a business in an industry you personally have years of experience in, this may help, such as if you’re a long-term accountant now with your own independent firm. Also, having a solid business plan drawn up never hurts. This can show how, exactly, you’ll make money.
Lack of experience is another obstacle that an alternative lender may be able to overcome. Some only require one year of experience before loaning money to an entrepreneur.
You’re Intimidated by the Loan Process
Applying for a loan can be a complicated process. You have to submit reams of paperwork, fill out endless application documents and probably sit through multiple interviews. Given how many hoops you have to jump through, it’s tempting to write off the process completely, especially if your business can survive without the influx of funds from entrepreneur business loans.
Even when loans aren’t absolutely necessary, however, they’re almost always beneficial. Having extra cash on hand allows you to purchase new equipment, invest in real estate or do whatever it takes to see your business grow. As the saying goes, you have to spend money to make money. Taking a business to the next level often means investing in your ambitions. It’s not an overstatement to say that business loans for young entrepreneurs provide the fuel for growth.
Plus, the application process doesn’t have to be excruciating. Alternative lenders that cater to small businesses and first-time entrepreneurs have intentionally made applying quick and easy. As a result, you submit your application faster and get a decision back sooner. Borrowing can certainly be intimidating, but it doesn’t have to be.
You’ve Been Denied
Once you’re turned down for an entrepreneur loan, you might feel like no one will lend to you. After all, one company looked into your credit, evaluated your business and decided you’re too risky to lend to. Therefore, all lenders are inclined to reach the same conclusion. It’s a common line of thinking, and logical on the surface. Fortunately, it doesn’t reflect the reality of small business loans for entrepreneurs.
Different lenders set their own standards for creditworthiness. Some put the majority of the weight on the credits score, whereas some want to see that you have a healthy cash flow quarter after quarter. Others, like most alternative lenders, take a more holistic approach when it comes to business loans for young entrepreneurs.
Lenders who choose to work specifically with small businesses know that businesses in their first years have a lot of potential, but it might be hard to prove on paper. Instead of dismissing these businesses as unworthy of loans, alternative lenders see them as exciting opportunities to invest in the American dream. Not only are they more likely to tell you yes (even when others have said no), they create their entrepreneur loans with the needs of the borrowers in mind, creating terms that are friendly to small business finances.