The good news – banks seem to be picking up their lending to small businesses.  The bad news – it is mostly SBA loans and you still have to qualify.  Bank standards have not changed or been reduced – but banks are now more willing to look at SBA backed loans – given “well qualified” borrowers.

With this never ending recession – the number of qualified borrowers is dropping like a sky diver without a parachute.  Bad economies put such huge pressure on individual financial situations combined with nearly impossible bank requirements nearly all potential entrepreneurs are essential shut out of the their markets in terms of obtaining a small business loan to start and grow their business.

Thus, new small business owners have to find ways to get creative in financing.

Here is an example of using personal loans for business start-up capital:

If you are still employed, still earning a salary or wage, but are thinking about venturing out on your own, this is a great time – starting your business at a point that the economy can only trend upward.

Getting financing for any purchase in life is called leverage.  Leverage means using cash flow – be it from a job or other means – to finance items that would take years – if not decades to save up for.  Leverage also means using your current situation – either your salary or wage or small business income to get working capital or make a large purchase and let that purchase pay for itself.

With that in mind, potential business owners can leverage their current situation (current income), apply for a personal loan – then get their venture started using those funds.

Once you have the capital in hand, for the most part, you can use it any way that you deem the most beneficial – including starting a small business.

There are non-bank sources of capital – that provide personal loans up to $125, 000 – that is a lot of money to get a business off the ground.

There are also other non-bank financial companies that provide smaller amounts in personal loans up to $30,000 – that are easier to acquire – e.g. less focus on credit or income.

The key here is that in order to start a small business you do not necessarily need business capital – as all money is the same color.  Additionally, for those facing other bank requirement issues like time in business or profitability or even collateral, personal loans may be the only answer.

In my opinion, if you have a great business idea but only lack the funds to get it off the ground; you should use any and every resource available to you – otherwise all you have is a great idea.

Joseph Lizio holds a MBA in Finance and is the founder and owner of Business Money

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