Issue link: https://docs.hic.us/i/403552
Financial Sources For Startup Costs There are five basic sources for Small Business Financing as follows: Leasing Companies By far the easiest method of financing embroidery equipment is through a leasing company that specializes in this area. These organizations are very familiar with the needs of Startup Embroidery Businesses, and can quickly process applications. Also Lease Companies don't usually require as much paperwork as traditional lending institutions. To make matters even simpler, most equipment distributors have their own Leasing Division or a close relationship with an outside firm, so that the process can be handled through the Salesman. Conventional Bank Loans The second most popular method of financing is via a conventional bank loan. The majority of theses loans are 4 years, 20% down, and variable interest. Typically, a bank will ask for a very detailed business plan, sales projections, and possibly additional collateral. Also, most Bankers don't have any idea what an embroidery machine is, so be prepared to provide plenty of documentation about the machines as well as the industry. Banks may also consider loaning money for other startup costs in addition to the equipment. SBA Loans Third on the list of Financing Sources is the SBA -Small Business Administration. Quite a few businesses have gotten start with help from the SBA. These loans tend to have longer terms, than those from Leasing Companies or Banks (Which may or may not be a good thing.) as well as lower interest rated. However, the SBA, being a Government entity, requires a tremendous amount of paperwork and is very slow to process the application. They may consider financing all of the startup costs in addition to the embroidery equipment. Venture Capitalists These are individuals and companies that are always looking for unique business enterprises to invest in. Typically they will finance equipment, startup costs, and working capital. However, their goal is to make a sizeable profit, so they are only interested in enterprises that can project a high rate of return. In addition, most Venture Capitalists will demand a controlling interest in the company, and possibly a voice in daily operations. Rich Uncle Actually, many entrepreneurs get off the ground by borrowing money from friends and family. Certainly there is a huge advantage over using a financial institution, but there are certain negative aspects of borrowing from relatives. It www.hsi.us care@hsi.us 62