Considering Debt as Means to Obtaining Capital?

Debt financing is usually easy to find for most businesses. Most local banks have loan officers that deal specifically with needs of businesses and understand the policies governing the SBA's guaranty loan program for those who do not qualify for a conventional loan. However, if you are considering incurring debt, your business must be capable of handling the burden monthly payments will place on your cash flow. Below are some initial questions entrepreneurs should consider before they begin the process of applying for a loan.

• What type of debt financing best satisfies my company's objectives?
• How much debt can I afford?
• How much can my cash flow vary before I will not be able to make my payments?
• What will happen to my payment if the interest rate on a variable loan rises?
• Do I want to commit company and personal assets as collateral?
• How much can I personally guaranty?

These are just some questions to get you started. The most important part of this process is to understand your options, prepare the necessary materials, and work closely with your lender. If you are interested in learning more about how the SBA and its programs can help you, click here for further information. If you are familiar with the SBA as an agency and would like more information on the loan application process, click here.