Start Up Business Loans - How Do I Get One?

It may be the case that to make your dream of owning a company come true, you will need start up business loans. These loans can be obtained from banks and other financial institutions and are intended to help you on your way to achieving your goals. It is essential that you work out how much you are likely to need before you approach any financial institution.

The amount that will need to be borrowed will vary from business to business. Some larger companies may require more funding than smaller businesses, which only require a "shoestring budget" to get started. It is essential that you identify the start up costs that you will have during the first period of your business being developed.

Ongoing expenses that may be found during this period include liability and property insurance, utility bills and staff wages. There may also be one-time expenses such as decoration costs, sign making costs, attorney fees or the fees involved with the process of incorporating your business.

The expenses that you have should be broken down into two categories, namely overheads and variable expenses. Variable expenses usually relate to the costs associated with the direct sale of a product or service. Overhead covers things such as rent, utilities and administrative costs. It is best to make a list with the headings of the two types of expenses and work out from there how much you are likely to need.

It may be possible to "cut corners" by incorporating your company with a company formation agent. These companies can form and register your company for you and provide all the documents you need within a short space of time. This may save money as the costs are generally quite reasonable and certainly cheaper than the fees of an attorney.

Company formation agent companies are easily found via the internet. They may also offer special packages and bonuses; for example, they may provide you with a ready-to-go business bank account. In which case you may have a better chance of getting the start up business loan from the bank that has the business account the agent has provided you with.

Once you have this information you are ready to ask for start up business loans. The bank will ask you for a detailed business plan in order to decide whether they would be willing to lend you the cash. Your plan should detail how the money that they will lend you will be allocated and used in your company. If you have any experience of the trade you are about to enter, make sure that you mention this in the plan. This information will increase the chances of the bank or financial institution agreeing to the loan, as the risk of failure is diminished slightly.

Many start up business loans will have a fixed or variable rate, much like a mortgage. The institutions will assess which loan will be right for you and will discuss the repayments that you will need to make each month. With the right planning, details and figures it can be a simple process to get yourself ready to request start up business loans.

Stated Income On Construction Loans?

Due to the increasing value of finished properties, constructions loans are becoming more and more popular everyday. That’s why it is not strange that stated income loans for constructions have become available in the last years. As with other loan types it is possible to obtain a loan even if you lack the proper documentation to prove your income from top to bottom.

There are however requirements that you’ll need to meet in order to compensate for this lack of backing up documentation. These requirements are different for the self employed and for the employed. Yet, there is a common requirement for both of them that will determine approval or decline: a down payment or cash reserve as an alternative proof of income and guarantee.

Purpose of Stated Income Feature

The idea of stated income is not to let you be economical with the truth and state an income over your capacity so as to get better terms or get approved when you otherwise wouldn’t. Stated income is meant for those who have alternative sources of funds or intricate tax returns and deductions and thus cannot provide full proof of their actual income capacity.

Also, for those who have a job but other sources of income too, it is possible to get qualified for higher amounts and better terms. Some lenders will be willing to state your job as the source of income but take into account the additional funds so as to reach the loan amount or repayment program that you desire. This is especially useful for those that wouldn’t otherwise meet the requirements for approval.

Simple Documentation Requirements For Approval

There are no harsh approval processes for these loans. There are simple documentation requirements that can be solved in a matter of hours. You won’t be required to show proof of income and thus, no copies of your pay checks or tax returns (if you are self employed) will be required in order to get approved for a stated income construction loan.

Instead mere formalities are required, so as to make sure that you actually have income regardless of its amount. You’ll need a note from your Certified public accountant or your TAX preparer stating that you are self employed or a letter from your employer stating that you are employed. No reference to actual income is needed. The documentation is needed only to back up the income source, not the amount.

The Cash Reserve Requirement

In order to get approved for stated income construction loan, you’ll need to build a cash reserve to guarantee repayment of the loan if anything unexpected happens. The amount ranges from one lender to another usually equals to three months to a year of the monthly installments of the construction loan. The repayment program will also determine the amount of the cash reserve. Longer repayment programs will require higher amounts and shorter repayment programs will require lower amounts. Also, the borrower’s credit score and financial situation will be taken into account to define the cash reserve requirement. An excellent credit score and financial situation may entitle the borrower to bypass this requirement.