How to Bootstrap a Startup Company

As I wrote earlier, bootstrapping can be a great way to finance your startup company without having to take on a swath of bank debt or give up equity to a private investor.  But the other side of the coin is that bootstrapping a company requires a lot of time, energy and patience; you won’t have piles of cash to solve the problems your startup encounters along the way.

Here are a few tips to keep in mind should you decide to bootstrap your startup.

What Business Loan Lenders Look For

Obtaining a loan for your business isn’t a trivial task.  Lenders have a finite money reserve, so they’re not going to dole it out without careful consideration.  One big mistake small business owners tend to make is failing to consider what loan lenders look for or require from their applicants.

To help expose and prevent this error, I’ve compiled a list of common items load lenders look for.  This isn’t a universal compilation - some lenders won’t look for all items and other lenders will look for more.  That said, this is a fair cross section of items one should be prepared to provide when asking a lender for a business loan.  Without further ado:

Understanding Small Business Loan Interest Rates

Overview of Interest Rates

During the last 12 months, I have repeatedly heard the terms, ZIRP, Fed Funds Rate, and Discount Rate.  Determined to learn more about economics, and hence these terms, I purchased a book on Macroeconomics and began learning about the impact these terms have on the broader economy and small business loans.

The Fed Funds Rate and the Discount Rate are interest rates which are under the control of the Federal Reserve Bank.   They are instruments of monetary policy designed to provide the Federal Reserve with control over the supply of money in the economy.   The Discount Rate is the interest rate the Federal Reserve charges a commercial bank when the banks needs to borrow money to meet immediate demands for capital.  The Federal Funds Rate is the rate that banks are allowed to charge one another on overnight loans to meet reserve ratio requirements.   ZIRP, or Zero-Interest-Rate Policy, is when the Federal Reserve effectively sets the Discount Rate to 0%.

How to Get a Small Business Loan With Bad Credit

Small business loans provide many opportunities.  From acting as startup capital to serving as a source of extra cash during a dry time, small business loans can be a saving grace for many businesses.  However, not all small business owners qualify; small business loans are difficult to obtain for those individuals with bad credit.  But all is not lost, for if you’ve got bad credit, there are a few tricks you can try to obtain a small business loan.  Here are three tricks of the trade.

Obama and Geithner Announce Plan to Stimulate Small Business

Yesterday was a big one for the American small business community.  Facing declining sales and a tightening credit market, small business owners have struggled since Wall Street crashed in October.  While the Recovery Act and new federal budget provided some help to small business owners, they ultimately left both small business loan lenders and borrowers wanting more.

Realizing the importance small businesses play in the American economy - they account for up to 70% of the new jobs and are a vital source of market innovation - Obama and Geithner announced a big plan to stimulate the small business community.  What follows is an overview of the plan and how each action point facilitates small business stimulation.

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