Startup Credits or Personal Financing
The first problem that you will encounter when you have an idea for a business is…money. Your first idea would be to get financing from banks and other financial institutions. A simple Google search would display hundreds of offers, but the reality is completely different. The banks have those offers for interested clients, but the financial recession made those institutions a lot more prudent, so getting a startup credit is only possible if you have a great idea, a good business plan and if you are able to convince the bank officials that your business has 100% chances to succeed.
Getting a startup loan
Before even thinking about calling a bank for a startup loan, you will need a solid business plan. The most important part of the plan is the financial projection. The bank wants to know when you will breakeven, and most importantly, when you can start to pay your rates. The projects that have a small estimated development time, which are able to bring profits fast, are encouraged, along with original ideas that bring something new on a market.
Even if you have a good plan, you will have to bring warranties. Your house, your car, other personal assets and even your current incomes might be taken into consideration. On the other hand, the pressure of knowing that you will remain without your house in case the business fails might be a major setback, putting pressure and stress on the manager.
Getting a personal loan
Getting a personal loan is easier, especially if you have a stable job. Moreover, if you don’t need a huge sum, you will be able to get it without material warranties such as real estates and other assets. The money obtained can be used in any way you like. The disadvantage is that such a credit is more expensive than the startup credit for companies. There is also the temptation of spending money for personal purposes. In the case of startup credits, the bank wants invoices, bills and documents attesting that you have spent all the money for developing the firm, while in the case of personal loans, nobody asks you about what happened with the money.
What if you fail?
Failing is always a disturbing fear, but you can’t begin a journey without thinking about it. What would you do in this case? If you have a personal loan to repay, you will probably go to your job every day, thinking that you pay a loan that was not useful for you. In case you have contracted a startup loan, maybe you have the possibility to talk with the bank. Maybe you were not able to obtain profits in the initially projected period, but if you were close, you might get an extension.
If you think that your business does not require huge financial efforts, and if you can also afford to get a personal loan for the needed sum, it is better to go with this option, instead of trying to contact a startup loan, as there are small chances for you to get one, especially during this period of financial recession.