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The majority of entrepreneurs must have access to funds at some instant. The pleasant news is, there are a lot of different business loan programs. Unfortunately, that's in addition the bad news. In other words, the cash is at hand, except it can be confusing to determine which business loans to submit an application for, in particular since countless business loans fund specific things.

When it comes to the financing popularity contest, equity funding is now in vogue. Stories in the mainstream media with reference to venture capital have glamorized the idea of promoting stock in your startup, and entrepreneurs across the world would much wish to raise cash in the form of equity more willingly than debt.

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Why is equity so appealing? Because it feels like you are getting "free" cash throughout the startup period. There are ordinarily no compensation obligations and no interest payments owed to equity investors. You'll moreover have some say in negotiating the cost of your stock, any share payments and the status the shareholder will have in your company. If your company goes belly-up, it's their loss (unless, of course, your investors can demonstrate in court that you did not disclose essential information that would have influenced their decision to invest).

Likewise providing funding, equity investors can be helpful in extra ways as well. They bring their business knowledge and lessons learned to bear on your business, plus they can turn out to be a advisor. The top equity investors are individuals with knowledge in your business, know-how of launching a business, a cool personality and a large bank balance. Some say choosing an equity investor is comparable getting married-you are making yourself responsible to this individual through thick and thin, so decide sensibly.

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Before you go investor shopping, though, you should assiduously reflect upon just what you are promoting and what having equity investors in reality means for you and your company. Very few businesses will ever be able to provide a decent return on investment (ROI) for equity investors. The usual restaurant or retail store, for instance, is unlikely to have any liquidity for its shares. And even if you plan to come up with a high-growth tech business, the likelihood of getting liquidity for your first investors is low. You must be sincere with yourself about whether your investors expect to be remunerated.

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What about good, old-fashioned loans?

If the sheen of equity capital is tarnished by the reality of having to produce a respectable ROI, you can fall back on the old familiar friend: a loan. The good news with reference to debt financing is that you're in spite of everything totally in charge of your business-your only job to your lender is to achieve your payments on time, as spelled out in your promissory note. As long as you do that, your lender has no right to meddle in your business. Interest payments are typically a deductible business cost, and if your lender is someone you know well, you may be able to get favorable reimbursement terms that can make the loan walk and talk much like an equity investment.

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There are several ways to create this flexibility:

• Defer the start date of repayment by adding a "grace period." Startup loans often have a six- to 12-month grace period before repayment starts, providing entrepreneurs with some time to ramp up the business.
• Capitalize interest. Your lender can also capitalize the deferred payments so they don't lose interest funds during the grace period. This allows you to pitch a lender by suggesting a much longer grace period (if you think you'll need more than 12 months).
• Use interest-only payments. If your lender wants to be repaid immediately, offer to make interest-only payments for a period of time to keep your monthly budget in check.
• Institute graduated payments. You can create a unique repayment schedule with low payments at the start of the loan and higher payments at the end when your business is proven.

For lenders who are very cautious about making a loan, you can offer to provide collateral on the loan, such as a lien on your car or home equity. Be careful, though: If your business isn't yet well established, taking on this type of risk too early could be a bad move.

Another solution that some entrepreneurs have used to find a happy middle ground between debt and equity financing is convertible debt, which is simply debt that converts to equity as the business grows.

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In order to show that you�re worth the cash, you�ll want to prepare some documentation. First, your personal credit history is relevant to your small business loan � especially if your business does not have a long operating history. They will assume that you operate your business in the same manner that you manage your personal finances. Bring your credit history with you to reference as necessary.

Next, bring financial statements for your business. You’ll need to show your business’s financial health. They want to know how much it’s worth and how much money you’re moving. If you’re serious about small business loans, then you’ll also want to prepare detailed pro-forma statements. These give projections about what your business will be worth going forward.

Finally, be sure you have an updated business plan. By preparing a detailed business plan, you’ll already have your financial statements and pro-formas prepared. Banks award small business loans to those that have everything spelled out and planned. I strongly suggest that you prepare a plan with as much detail as possible – including bios of you and your partners, your track record, your strategies and advantages, and more.

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