Look at the lender’s requirements. The various intermediaries have some leeway with respect to crafting their approval process. Once you’ve found some lenders servicing your area call them or go to their website and learn about their requirements for loan approval. Some common requirements include: A business plan—it helps if you’ve already got a business plan, but if you don’t, nearly all of the lenders will assist you in crafting one. The business plan not only helps the lender understand your business goals, it helps you develop realistic expectations for the future of your startup. Collateral for the loan. Since most of the microloan borrowers don’t have a business track record, incomes, or credit history that would support a conventional loan, the lender wants assurances that the borrower is serious about the success of the business venture. Tesco Bank Personal Loans can be items like cars, real estate, jewelry, or equipment you plan to buy with the proceeds of the loan. An alternate source of income. Almost all of the lenders will require the borrower to have an alternative source of income in case of default.
Bring your accounts current. Although microlenders are more lenient with respect to credit scores than conventional lenders, they still have to make sure borrowers can pay them back, and the easiest way to make it appear as though you won’t be able to pay them back is to be behind in your current accounts. This includes back taxes. If you do owe back taxes, you should at least get current on a payment plan before trying to get a loan.
Get an EIN. Microlenders do their best to consider the whole person and their fitness for leading their proposed business venture. One of the ways they measure a borrower’s commitment is by checking up on the details associated with business ownership. One of those details is finding out whether the borrower has requested an Employer Identification Number, or EIN, from the IRS. The EIN is like the Social Security number for a business. Having an EIN is a prerequisite to legally employing workers in the US. Any serious business owner will need one sooner than later.
Register your business. In the same vein as the EIN, you should take steps to register your business. There are pros and cons to the various types of business formats, but the worst one is the sole proprietorship, which is the default. If your business is organized as a sole proprietorship, it means you are personally obligated to satisfy the business’ liabilities. Look into the corporate and limited liability company (LLC) formats instead. An LLC will probably be the best for a small business, but your circumstances might indicate otherwise. If you need a more detailed guide on the advantages and disadvantages of each type of business form, you can learn more at Determine if You Need to Incorporate. You’ll register with the secretary of state in your state.
Craft a compelling story. A crowdfunding campaign showcases an entrepreneur’s idea to the public, asking for contributions to make the entrepreneur’s vision into reality. In order to do that effectively, the crowd needs to be convinced the entrepreneur’s vision is something to be pursued. You have to do more than just tell your story. The crowd needs to identify with the story you’re telling. Your good idea gets them to listen to you and give you their time, but it’s your story that gets them to give to you at the exclusion of everyone else. So, if you started selling prosthetic limbs because you lost your leg in Iraq, tell the story of how you lost your leg and how it lead you to want to create better products.