The Various Advantageous Features Of Small Business Start Up Loans

The most essential requisite for starting a new business is finance. Because banks and other conventional lending sources are apprehensive about giving loans to start up businesses, it is an important task for these business owners to arrange for appropriate financing sources. Since there is a huge difference between small business start up loans and loans for established businesses, it is extremely important to find a suitable lending source according to the requirements of the business. Start up loans are more dependent on loans for all of their financial needs than established businesses, and needs to be financed for almost everything required to set up the business. So before you start a new business, it is overly important to make a detailed research of the market to find the most appropriate lending source and loan deals for your business.

Let us discuss some of the important features of small business start up loans:

These loans are mostly provided by the Small Business Administration (SBA), which is a United States government agency providing financial support to small businesses and aiming at building up the strength of the country’s economy by supporting the establishment of small businesses. SBA does not provide these loans directly to borrowers, but through private-sector lenders that are guaranteed by the SBA.
Since start up business owners do not have enough capital, these loans are mostly obtained at lower interest rates.
SBA acts as your guarantor, and helps you in acquiring business start up loans in case you do not possess properties for mortgage purposes.
Small business start up loans can be obtained very fast. You get them as soon as you apply for them. This is extremely helpful for new business owners who are mostly dependent on loans for all their business requirements.
These loans can be secured even by individuals having poor credit histories, including arrears, bankruptcy, late or missed payments, insolvency, IVA etc. Small business loans provide an opportunity to the borrowers to improve their credit history.
These loans can also be used for refinancing an already existing business.
Business start up loans can be available in any amount, ranging from a few thousand to more than $100,000. It is advisable for borrowers to make a meticulous research on the market and a detailed comparison between the terms and conditions offered by various lenders to find the most suitable one for your business.

These loans are available for anyone having plans to start a new business.

Starting a business involves various details. Here are some of the important purposes a business start up loan can be used:

Purchasing the office space.
Purchasing essential machineries, furniture and other office equipment.
Purchasing necessary electronic equipment like a computer, fax machine, printer etc.
Hiring staff and paying for their salaries.

If you are new in the world of business, it is always advisable to consult an experienced and knowledgeable counselor to discuss your best options for a business start up loan, and the various ways of finding the right lender for you. It is also important to make perfect and flawless business plans before you decide to apply for loans.

How To Select The Right Home Business Model

Having the right idea is only the start of setting up a business. To run it successfully will depend on the type of business model you select from the beginning. It is wise to speak to an accountant on which option is right for you, however I’ve put together five business models and some key points to consider before deciding.

Business Model #1 – Proprietorship

This is the simplest and most common type of business model. There are no legal obligations to consider you can simply set-up shop and start selling your product or service. If in Australia you will need your Tax File Number and a Business Number to buy from other businesses. Registering for Goods and Services Tax is optional and is only needed once you earn over a certain threshold. A proprietorship gives you great flexibility to start your business on the “cheap” and without any major commitments apart from declaring your sales at tax time. But you should know that setting up this type of business means that you are legally responsible for anything and everything. Other than that this is a very tax efficient business model for small businesses.

Business Model #2 Partnership

A partnership is a relationship between two or more people who come together to run a business and share the profits earned. It is also sometimes know as a “firm”. Typically you would use an accountant and sometimes a lawyer to set it up, but mainly to formalise the rights and duties of all the partners and decide each partners share of the profits.

They are easy to set-up and it means that the business has access to more capital as there is more than one person contributing. Depending on how many people want to form the partnership you may need to check if there are too many of you. One drawback is the fight over power and you do need to check liabilities because personal assets are targeted should there be an issue with credit default.

This model works well for professional service firms such as accountants, lawyers, doctors etc.

Business Model #3 – Company

A company is just one person or a group of people. There is also a variety to choose from depending on the business model such as private, public listed, not-for profit, etc. When I started my business I opted for a private company but setting it up is complex process, expensive and involves much paperwork. But once it is set-up you can run many entities underneath. It is separate legal entity and involves at least a director but can also have shareholders and a board if it’s publicly listed. The best thing about a company is the limited liability. If there is a credit default, personal assets of directors and shareholders stay protected – although you should note since the global financial crisis there has been a big crack down in this area and cases where directors have been fined. For a start-up this business model should only be selected on the advice of your accountant.

Business Model #4 Franchise

A franchise is where you are the boss but don’t have to worry about branding. marking, product creation etc. This hard work is all done for you and is turn-key in the sense that the Franchisor instructs you on the exact method to set up your business so you hit the ground running from day one. The downside is that the marketing, product development, branding and working side of the business are in the hands of the Franchisor so there is little scope for innovation from the Franchisee. There are also royalty fees to pay and the up-front commitment cost.

Franchises come with high levels of support and an established brand name., is that you can find a business to suit all pockets, no matter which industry you want to set foot in. You should consider this model is you don’t like risk and want loads of support and handholding.

Business Model #5 Trust

Many people don’t think of Trusts as a business model but they are a great addition to a company structure. This was the option I also included when I set up my business. The trust becomes the majority shareholder and the trustees are primarily responsible for managing the assets and business for the benefit of the company.

I don’t recommend setting up a Trust on your own. They are often regarded as a Tax loophole and that’s because there is so many was of setting up a Trust. So get your accountant to do it for you.