We had the newly hired Box Elder Business Resource Center Director, Jason Yerka, present “How to get Start-Up Financing.” He touched on 4 different ways to get your business started and what it takes to get a bank loan.
1. Private Financing (could be relatives, friends, acquaintances). He mentioned that if you can’t convince friends and family to loan you money, you probably won’t be able to convince a bank.
2. Micro-loans (Jason feels anything less than $35k would be a micro-loan).
He mentioned:
a. the Utah Micro Loan Fund (www.umlf.org) — You should talk with Jason or another SBDC office to get this type of loan.
b. Personal Loan
c. Micro-Credit Loans (could be a 1. credit card, this would be a personal credit card…if you want a business credit card, you must have a business license. or 2. a bank (unsecured) loan, if your income and unsecured debt ratio is less than 40%. Also, you must keep reliable source of income coming in and it’s based on your personal credit scores.
3. Peer to Peer lending (could be a S-Corp with up to 75 people as shareholders). Some examples include:
- newspaper ads
- Group Investor Lending
- Crowd Funding
4. Savings (requires careful planning). Jason mentioned that you should get your business license now to show that you have been in business for some time. He also mentioned that you should research your market exhaustively and save, save, save!
There is one other help out there and that is through the Utah IDA where they match 3:1 (under certain conditions). Go to www.uidan.org for more information.
Jason also gave us a few keys to getting a bank loan, if/when one is needed. First get your personal credit score above 700, second, get business experience (or have a solid board of advisors), third, save until you can put 10-30% down and fourth, have something as collateral!
Jason is a fantastic person to sit down with and talk about your business plans and what you can do to be prepared. Make sure you give him a call 435-919-1235.