In Growth & Profit

Guest Post:  Kavin Matthews is a financial writer from Carson City, Nevada, who has expertise in dealing with financial issues. He loves to contribute financial write ups to websites and blogs so that he can help people who are struggling with financial worries.

bank loan

Starting a small business is a difficult task particularly if you find it difficult to obtain financing in this tough economy.  Here are the three most common ways to access the funding you need to make your business a success.

1. Make use of your own funds – When starting your own business, the first question that arises in your mind is how you will arrange for the required financing. You should first make use of your own savings and invest it in your small business.  While there is always a chance that you might lose your entire investment if the business does not succeed, no knowledgeable outsider is going to finance you if you don’t express confidence in the business yourself. 

2. Take out a bank loan – One of the most common ways of financing a business is to obtain a conventional bank loan. Be mindful that bank lending standards have tightened considerably in this tough economy. Make sure that you have a good credit score before you approach any bank or lending institution requesting a loan for your small business. While some lenders may agree to approve your loan request despite the bad credit score, you will be charged an exceedingly high interest rate on your loan.  Generally speaking, however, a bad credit score will likely preclude you from obtaining the requested financing.

3. Opt for a family loan – Borrowing from family is something that I recommend avoiding.  If, however, your family has confidence in your management ability and trust you to repay the loan, then you can arrange financing without a bank loan.  I suggest that the loan be evidenced by a written agreement stipulating the loan term, interest and any collateral you are offering to secure the unpaid amount. A benefit of borrowing from family members is that they may agree to a below-market interest rate for the loan.  The biggest risk in borrowing from family members is the chance that your relationship may be destroyed if you are unable to repay the loan.

By considering alternatives to bank financing, you might find the funding you need to jumpstart a successful business.

You can contact Kavin by phone at (916) 745-8155 or email him at

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