by Luke Hayward
Everything You Need to Know About Small Business Funding
America’s startup culture is thriving, and while most small business owners start with less than $10,000, a loan can help new companies grow. High levels of spending and consumer confidence, along with a strong stock market and recent changes in tax laws, have helped push the economy forward.
On the other hand, December 2018 was the worst December in 10 years for the stock market, so there is uncertainty surrounding the economy heading into 2019. These developments can have significant effects on the lending environment for large and small businesses alike.
Interest Rates and the Economy
When interest rates rise, lending becomes more expensive for businesses throughout the economy, generally leading to a downturn in business loans. This can be especially problematic for new brands who are looking for small business funding to help jump start their operations.
Small business ownership is important for employees who are interested in dedicating themselves to a specific project. The average employee holds a given job for under five years, and that number falls to barely three years for workers between the ages of 25 and 34.
Getting a Small Business Loan
Qualifying for small business funding like a loan requires careful planning and a thorough business plan, especially in a somewhat uncertain economy. An effective business plan communicates important details about the company that will show potential lenders that your company has a good chance of succeeding.
If you’re concerned that interest rates could rise in the near future, you may be interested in looking for capital immediately even if you don’t currently need it. Having low-cost capital available will go a long way if those loans become more expensive and harder to find.
Determining How Much to Borrow
One of the most important tasks involved in creating a business plan is figuring out how much money you need and what it will be used for. It’s better to ask for too much than too little, as projects often go over budget. It’s simply impossible to predict what will come up as you grow your new business.
If you’re only looking for a minimal amount of seed money, you may not need to look for a small business loan at all. While most new business owners use their own money, seeking investment from friends and family is just as common as getting a loan. However, mixing your business and personal lives can get messy, especially if things don’t turn out as planned.
Starting a new business is an incredibly exciting adventure that offers the possibility of long-term growth and success. If you’re interested in creating your own company but don’t have the capital to get off the ground, you’ll need to look for other sources of funding. Understanding your options and the importance of interest rates will help you make an informed decision for your business.