Do you live in a rural community and have a viable business idea or want to expand your current business, but don’t know how to get funding? We can help!
Securing funding for a start-up or expansion can seem discouraging and daunting. Community Futures will help guide you through the process and become the successful entrepreneur we know you can be! There are many reasons why small businesses need funding such as start up costs, equipment, inventory, staffing, among many other expenses. Community Futures offers flexible and affordable small business loans for entrepreneurs in rural communities to help with those costs.
Don’t know where to start?
The first part of securing a loan is understanding the 5 C’s of lending. These are the elements that lenders consider when approached by a borrower.
1. Credit
Also referred to as credit score, credit report or credit history is a critical component for lenders. As a start-up, your business may not have credit history, therefore reviewing your personal credit may be necessary. Maintain good credit by paying bills on time, a history of late or missing payments negatively effects credit score.
2. Capacity
This refers to the amount your business can borrow and your ability to repay that amount. Lenders want you to demonstrate how you will repay the loan through cash flow, revenue and expense statements. This ensures that you will have the ability to repay the full amount based on the terms of the loan agreement.
3. Capital
This is the amount that you have invested in your business. Lenders want to see that you are serious about your business and will work hard to make it successful before they risk lending to you. The amount that you have personally invested will demonstrate to them exactly what you have to lose if your venture goes south.
4. Character
This is determined through your repayment patterns and whether you are a reliable borrower or not. Lenders would like to see that you are trustworthy in repaying debts and often take education and experience into consideration. Be prepared and knowledgeable about your future or expanding rural business before applying for a loan.
5. Collateral
Also known as security against a loan, are assets possessed by your rural business or you personally. If you are unable to repay the loan, property, equipment and any other assets may be garnished by the lender. Lenders may also request a guarantor or co-signer, someone who agrees to pay the loan off if you are unable to.
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