We all know money doesn’t grow on trees. This reality becomes especially clear when you’re an entrepreneur. Most startups need a little push to get them on their feet. That’s where small business loans come in. How do you get one? We’re here to help you through the process with a few tips. Read on and cross your fingers—you may receive a small business loan for your startup! 

Small Business Loan Application Process

Fortunately for you, small business loans usually have less restrictive requirements than other types of loans. It’s crucial to find out if your business qualifies for a small business loan in the first place (you can do so here). But there is still hard work ahead and you will need extensive documentation. While every lender is different, the most important part of the process is the loan application. According to the Small Business Administration (SBA), you will need the following:

Executive Summary

This is a simple statement of who you are, your business background, the nature of your business, the amount of the loan you are requesting, terms of repayment, how the finds will be used and how you will repay the lender.

Business Profile

• Type of business
• Location
• Product or service
• Brief history
• Annual sales
• Number of employees
• Proposed future operation
• Competition
• Customers
• Suppliers
• Date of information

Management Experience

Provide résumés of all key players in the business.

Loan Request and Loan Repayment

A loan request is a description of how the loan will be used including purpose, amount and type of loan. A loan repayment states how the loan will be repaid and how long it will take to repay it. Cash-flow schedules and budgets should be included.

Collateral

A list of real property or assets that will be held as collateral.

Personal Financial Statements

Business Financial Statements

Proposed Business

Include a pro-forma balance sheet to show future profitability.

Projections

Show future projections for at least a year or until positive cash flow can be shown. Include reasons for your estimates and how the numbers compare to the industry standards.

Tips to Remember

• Know your business inside and out! Many tricky questions will be asked. Impress the lenders and show them your business will succeed.
• Be confident! If you’re not confident in your business, why should they be?
• Practice, practice, practice! Make sure your message is polished and flub-free. Review Your Elevator Pitch: 7 Must-Have’s.

If funding has discouraged you from growing your startup, small business loans can help! All you need is some patience (hundreds of filled-out forms worth) and hard work. With the funding you need, you’re one step closer to your startup goals!

Have you ever seen a woman “decoder”?  These are hilarious “guides” that men use in order to understand women (don’t know what we’re talking about?  Click here).  Although sites like this tend to group women into the stereotype of being difficult to understand, many men find themselves able to relate to this predicament.  

In all honesty, the investor-entrepreneur relationship is very similar.  In many instances, entrepreneurs don’t exactly understand what venture capitalists are saying, what they mean or more importantly, what they are trying to ask.  That’s why we’ve created an investor decoder for you.  What are these high-profile people asking...and what do they really mean? 

Though your idea may be truly unique, venture capitalists want to know if you’re really capable of executing it and if you’re able to do what you say you will. Most importantly, they want to know that their investment in you and your company is a good one.  So take a deep breath, relax and pump yourself up for the most intense question-and-answer session you could face! 

Entrepreneurial growth has steadily been on the rise in recent years since the economy took a turn for the worse in 2008. But this surge in entrepreneurship means growth of businesses and more new jobs. Many startups have great ideas that aim to make our lives better. However, every entrepreneur faces a huge obstacle that can plague a business: funding. Some have it; many don’t. Even for those that do get funding face headaches and problems.

Plus, entrepreneurs have to ask themselves many questions in the funding sphere.  Do you go for crowdfunding or look for local investment? Do you try to find an angel investor or seek out a venture capital group? The questions are endless and the answers will vary depending on the business model. So what are a few keys to getting that funding you need? 

1. Put your own skin in the game:
   Starting a business is a major risk.  By not investing your own money, you’re sending a message of doubt to potential funders. If you think, “Hey, I’m investing my time. That’s got to be worth something,” you’re still not investing enough. Your time is the measure of your effort. Your money is a measure of your passion.  As Kelly Pruneau of Women's Capital Connection says, “If you don’t put your own skin in the game, what makes you think I will?”
    
2. Ask people you know:
   Friends & family—we all have them. When you have an idea that you’re passionate about and you know could be big, don’t be afraid to ask. Whether it’s a well-off uncle or a friend from college, the worst that could happen is that they say no. These people may also have wisdom in that field that will allow them to help in other ways
    
3. Look to the crowd for answers:
   The great new trend for startups is to get crowdfunding. Sites like Kickstarter, Fundable and Gust all allow you to pitch your idea to millions of people who, in turn, can become potential investors. However, according to Rachel Qualls of Angel Capital Group, it’s important to “gather credible local investors first before looking to crowdfunding”. She also suggests, if possible, to accumulate 90% of your projected needed capital. This way, you’re dealing with people you know. You’re more likely to hear from the person who gave $5 rather than one who gave $5,000. Rachel also says that due to the popularity of these sites, it is becoming increasingly harder to “rise above the noise”. Giving insight into the mind of potential angel investors that view funding portals, she says, “Don’t pay for extra listing fees that promise to increase visibility. Investors don’t care for it.  Instead, they look for what has already be raised and how quickly it can become liquid.”
    
4. Know the rules before you get into the game:
   The recent popularity of the crowdfunding has brought about the good folks of the Security Exchange Commission. On May 7th, 2012 they issued guidance to prospective crowdfunding intermediaries under the Jumpstart Our Business Startups (JOBS) Act (H.R. 3606). This measure was taken because the current crowdfunding space looks a lot like that of the stock market prior to the major crash in 1929. A full list of SEC guidelines for crowdfunding is available here.

Let’s say crowdfunding isn’t your cup of tea, mainly because you don’t like a bunch of random peoples’ hands in your tea.  That’s where angel Investors and venture capitalist firms come into play. Much like an elusive white-browed shortwing, these groups can easily be turned off by your actions so it is imperative to know how to deal with them.

• Know everything:  Investors understand that you are passionate about your business.  Don’t spend 14 minutes of your of 15-minute pitch only talking about how cool your business idea is. The investors aren’t really investing in the business. They’re in vesting in you. They want to know if you can do what you say you will. Have you done a reasonable financial forecast? Have you researched the market and potential competitors? What role do you expect from them? These are some of the questions that investors want to know the answer to.
• Don’t just look for a check: You want to find a sophisticated investor, someone who has already had success. Nine times out of ten, their wisdom is more valuable than their money.
• Don’t be afraid to Think Big: There are many obstacles you may encounter along the way, but that shouldn’t get you down. When you have the opportunity to pitch to angel investors, be optimistic and fearless.

Getting funded is a major undertaking.  You may hear the word “no” 100 times but one “yes”.  But that “yes” is all it takes to make your idea a reality. Whether you ask friends and family, seek out angel investors, or look to crowdfunding, there is one thing that is universal: people invest in you.

It takes more than a great idea and a load of confidence to get a business funded.  It also takes a killer pitch.  A pitch is the opportunity to convince others to believe in what you have created. You are an entrepreneur, you are a risk-taker, you are a unique and inspired individual and it has led you to this point—the point when you stand up in front of a group of influential and experienced venture capitalists or angel investors and let your idea make the right impact on the right people.   

As all entrepreneurs know, a pitch is essential to the startup success of a business.  Here are 5 steps to take before you give your next big pitch:

1. Do more with less content

Remember: less is more.  Write this simple phrase on a Post-It note and stick it on your laptop as you prepare for your presentation.  It’s tempting to include every single detail of your business, but it’s important to resist.  Keep in mind the 10-20-30 rule:

1. 1. 10 slides: The number of slides you use should be both minimal and informative.
   2. 20 minutes: Be sure that you can present all of your slides in twenty minutes or less, otherwise you’ll lose the attention of those investors.
   3. 30 point font: This large font will help keep your slides simple and clean.

If you write everything you plan on saying, regardless if your pitch is memorized or not, it will appear that you are reading off of the screen.  Less. Is. More. Don’t forget it.

2. Know your numbers

Every business owner or entrepreneur should know their numbers and be prepared to present them at any given moment (especially during a question and answer session).  Numbers are what venture capitalists are most interested in and they need to be confident that you know exactly how well your business will do. Know your revenue, not just your profit, and have projections for this year and the years to follow. It doesn’t matter if you tend to be a creative soul that lacks numerical inclinations.  You absolutely must know your numbers or you and your business will instantly lose credibility.

3. Prepare for the worst and you’ll be sure to do your best

Problems can come up at any moment that can throw you off your game and potentially harm the effectiveness of your pitch. Prepare yourself as much as possible for the “wrong” situations. Cover all technological bases—back-up your presentation and then back-up your back-up.  Never trust your technology demo completely. In fact, it’s important to be ready to pitch without any technology whatsoever.

If you are presenting with a team, make sure that every member has the ability to do every part of the presentation. A well-rounded and well-prepared team will be an invaluable asset.

What are other ways to prepare for the worst?  Sit down and write down every possible thing that could go wrong and come up with a solution for each. You’re an entrepreneur—this is what you do best.  You’ll be happy you took the time to do so.

4. Learn by example

To further prepare yourself, watch episodes of ABC’s Shark Tank. Seriously. These are real people with real companies making real pitches. You can learn from their successes as well as their mistakes. When watching the show, be sure to pay attention to the questions and advice the Sharks provide. Each one of them has the expertise and experience in the world of startups.  We suggest that you write down the questions they ask presenters and prepare your own answers. It is inevitable that you will be required to answer some of those very same questions. You cannot underestimate the likelihood of a tough question coming your way. Be ready!

5. Crank up your confidence

Practice, practice, practice! This cannot be stressed enough. Once you’ve put together your perfect pitch and well-prepared PowerPoint, you need to memorize it. With your pitch perfectly mastered, you will avoid sounding nervous in front of important investors. 

Practice in front of the mirror—you will be your harshest critic. Practice in front of family. Practice in front of friends.  Practice in front of anyone who is willing to listen!

Finally, to further increase your confidence, take the time the night before your pitch to sit back, relax, and visualize. Visualize yourself giving the perfect pitch, imagine the investors nodding and smiling as you hit on your key points, picture yourself being the confident and successful entrepreneur you are.  This relaxation technique will help to soothe any last minute nerves and will be a good way to mentally review what you’ve already memorized.

With these 5 steps, you will be sure to exude the confidence in yourself and in your company that will inevitably attract the attention of venture capitalists. You will be unstoppable. Lastly, remember that investors aren’t just investing in your business, they are investing in you. Be ready for anything and be yourself!

For more tips on how to present during your pitch, be sure to read 10 Tips for an Effective Pitch.

According to research done by the U.S. Bureau of Labor Statistics, nearly 60% of new businesses shut down within the first four years of operation.  With these slim chances, it seems even more impossible to get funded. But don’t run off to the corporate world yet, entrepreneurs. Instead, check out the top four things venture capitalists look for when selecting a startup to fund:

1. A Coachable and Passionate Management Team
   
   When venture capitalists set out to invest in new projects, they first examine the brains behind it all. Whether your business is run by an individual, a partnership or small management team, the VC wants to be confident that the business is built on a solid foundation. Venture capitalists look for management teams that are goal-oriented and coachable. If the management team is not willing to learn from the VC, the collaboration needed to grow the business is difficult, if not impossible, to establish.
   
   Two important characteristics that entrepreneurs need to be successful are resiliency and emotional intelligence. Resilient entrepreneurs exhibit passion and are the driving force behind the business and its employees. Entrepreneurs who have emotional intelligence also have the intuition to know when to pack up and move on to the next, more viable idea. Great entrepreneurs understand that making mistakes is part of the job description. Venture capitalists value entrepreneurs who can learn from failure and can use it as a motivator.
    
2. Realistic Business Plans and Expectations
   
   An entrepreneur must write a clear and concise business plan that defines what product and/or service their business offers.  Although a long, detailed strategy is not always necessary, a solid written plan assures investors that the entrepreneur has calculated the potential opportunities, risks and competitors in the marketplace. Having the official business name, description, competitive analysis and goals clearly outlined in the business plan will be helpful in the long run. 
   
   More often than not, startups take twice as long to get off the ground and cost twice as much as the founders expect. Clear predictions and correct expense calculations are crucial for establishing a business’ credibility to potential VC’s. For more information on what (and what not) to include in your business plan to attract the right VC, see 5 Business Plan Mistakes that Send Investors Packing.
    
3. Ability to Problem Solve and Scalability
   
   Venture capitalists look for businesses that have long-term viability. Successful startups must be scalable in nature (in other words, they must possess the ability to grow and perform with consistent quality). Venture capitalists look for businesses that solve problems that are financially worth solving. The idea is not relevant, or financially viable, if there is not a sizeable, addressable market that cares about the problem the business is trying to solve. The business needs to provide a service that people are willing to take action on, right now.
   
   At the same time, it isn’t just the idea that is important.  In fact, the process could possibly be the most critical for a startup. Herb Sih, startup consultant and co-founder of Think Big Partners, advises that “entrepreneurs seeking to gain funding from a venture capitalist should remember not to fall in love with their idea, but instead fall in love with the idea of solving their problem.”
   
   Business success is not always measured by an end result, but how the leaders react to the obstacles along the way. The ability for an entrepreneur to rebound after failure is an indicator that he or she will be successful in the future. 
    
4. Mutually Beneficial Relationship
   
   Venture capitalists are not all the same. At the end of the day, the business in question should fit into the VC’s overall portfolio and the relationship should make sense for both parties.  But how can entrepreneurs connect with venture capitalists in the first place?  To many, they seem extremely difficult to find.
   
   There are a handful of guidelines about what not to do when approaching investors. One of the worst ways to attract venture capitalists is by unsolicited email. Many times, this demonstrates that the entrepreneur has not done the appropriate research. If you have a particular VC in mind, find a way to get connected through professional acquaintances or at networking events. Use professional social media platforms like LinkedIn to stay connected after the initial meeting and attempt to develop a professional relationship through social media.  And always keep in mind that whether the benefit is high margins, proprietary, patented technology or a different advantage, a VC ultimately cares about their return on investment - and how soon they will get it.
   
   Securing adequate funding can be stressful and time consuming. If you focus on these four tips while planting your small business seed, you will reap the rewards of a credible VC and valuable capital!