Funding and Banking Needs for Start-up Businesses

So you’ve spent weeks and weeks planning and preparing for the big business launch of your new startup company, Buddy’s Lawn Care Service. You have studied your business model, worked out a certain strategic plan and even set up vision and mission for your business. Now it’s time for you to incorporate the many different banking services that will help make your new company successful. Before you can launch, you need equipment, which means you need some capital to help get Buddy’s Lawn Care Service started.

Unfortunately, you may not have the best credit, or you may not have enough money to put down to help that debt-to-income ratio that most banks and lenders require. So you go to the local neighborhood loan shark, also known as Wendell, who is not as forgiving when it comes to late payments, and he only charges about 50% interest on all loan payments. From your point-of-view, it sounds like a win-win situation to help get Buddy’s Lawn Care Services up and running.

What Banking Services Are Available
So when it comes to commercial banking consumers have many options and services to utilize. For starters, if you happen to own an Android or iOS smartphone you can acquire one of the multiple apps as options for merchant services like; Global Pay or Square that will enable you to take credit or debit card payment transactions from almost anywhere. Of course, not every business is running a lawn care service and run their business from a brick and mortar setup.

From those locations, business owners run those merchant services connecting directly to a landline allowing them to use a credit card machine. More and more companies are starting to move away from landline connections and rely more heavily on the features of using iPads and iPhones to run all their merchant needs.

Add to merchant services the many options of mobile banking for businesses and mobile check deposit that allow the business owner to take pictures of cards and checks for automatic deposit into your account. A business owner can also benefit from sweep accounts that are connected to a line of credit so that if funds are not available on their main account, the funds are swept over from the line of credit account. Those are just a few services available to help make your new business venture a success.

Having Enough Capital to get started
Getting all of the services you may require running your business successfully will all be for naught if you are unable to acquire the necessary capital to get the project up off the ground and running. A lot of start-up businesses, if unable to borrow the money from friends or family, turn to banks and lenders. A lot of commercial banks or lenders have some very rigorous requirements to get a commercial loan. And that is money that most people need for their capital or start-up funding to help get the business rolling.

There are many types of business and commercial loans available depending on the size of your company, how much you are looking to borrow, and what fits best for your situation. One place to start involves banks who work with the Small Business Administration (SBA). The SBA will look into most aspects of your financial well-being including your personal background, resumes, business plan, personal credit report, business credit report (where applicable), tax returns, financial and bank statements, collateral, and legal documents (for starting up your business). In fact, the list provided can be expected upon trying to acquire any commercial loan, not just through the SBA.

If you are seeking to get a traditional commercial loan, bankers may want to see some effort on your part, which will require some additional collateral on your part to qualify for the credit. Often the commercial lender will offer 80% or 90% of the loan you need while you put up the additional 10% to 20% of collateral.

Why does it matter that bankers and lenders require some collateral upfront? Lenders want to ensure that you can pay back the loan and that your business plan is strong enough to earn back the funds to pay back the loan. Lenders are looking for that trust factor that if they give you money, that you have enough character to pay them back.

Avoiding costly loans from payday lenders or the local loan shark will save you money by going through the right commercial bank. Make sure and shop for competitive interest rates, as each bank will vary based on the loan you are getting, and your credit.