As you navigate business financing, it may be tempting to use your personal finances to help out when your business needs a boost, but that is not always the best solution in the long run. Separating your personal and business finances can help ensure you treat your business like the independent entity it is, while safeguarding your personal finances.
Online lenders and startups have been mining Yelp and Facebook for several years, checking out how many followers a business has and whether loan applicants are posting photos of extravagant vacations, to discern whether potential borrowers are a good risk. But now, brick-and-mortar banks are stepping into the world of social media monitoring, checking these sites and other nontraditional data sources, such as utility records and Amazon.com payment history, for financial clues in making loan decisions.
Securing a small business loan isn’t easy following the financial crash of 2008 and the subsequent tightening-up of lending criteria. However, assuming your credit is in good standing, there may be a number of lenders – both alternative and conventional – competing for your business. So what are the key questions you should be asking before committing to a particular loan and provider?
Running a small business doesn’t come cheap. Even if you’ve scrimped and saved to bootstrap the operation on your own, or were fortunate enough to get an investment from friends or family, there may come a time when you need a loan to continue operating your business.
Whether it’s working capital to fulfill a large order, a small loan to purchase new equipment, or a large loan to expand to a new location, chances are that at least once in the life of your business you’ll need to approach a bank for a loan.