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12 Answers to Successful New Micro Enterprise Financing |
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When approaching your lender with an idea for a new micro enterprise, the following 12 points should be fully covered in your proposal.
- Research: Thoroughly research your proposal and have accurate data and information.
- Examples: Have examples from someone who is already engaged in the enterprise you want to start concerning expenses and potential profit.
- Market Information: Have reliable and documented information on markets and how to access them.
- Business Plan: Have a professional business plan.
- Experts: Suggest a "third party" who can provide an unbiased opinion about the business proposal (i.e., SBDC, Extension).
- Self-finance: Be creative in finding ways to finance up to 30-50 percent of the total proposal yourself.
- Risk Management: Find ways to spread or minimize the risk so that the lender does not carry the full financial weight of the proposal.
- What If: Do not present only a best case scenario to your lender. Also present a worst case scenario with an alternative pay-back plan.
- Salary: Document that you may not be withdrawing salary from six months to two years following start-up.
- Credit Record: Know that your past performance on loan repayments may effect your credit-worthiness.
- Resume: The lender needs to know whether you have the skills to make your proposal work. Provide evidence which documents successes you have had.
- Small is Beautiful: Do not attempt to begin on a large scale. Earn your lenders confidence by beginning small.
These 12 Answers to Successful New Enterprise Financing came about as a result of a project the Rural Development Center undertook with rural banks. Financing for the project came from a Rural Revitalization Grant from the Iowa Department of Agriculture and Land Stewardship.
Tips courtesy of Kirkwood Community College, PO Box 2068, Cedar Rapids, Iowa 52406, 319-398-5699
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Last Updated ( Tuesday, September 25, 2007 )
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