In our last couple posts, we’ve discussed considerations for funding your own venture and for reaching out to “family, friends and fools” to get your startup off the ground. Great options for some, but what if you don’t have a trust fund or a rich uncle? The bank is a logical next step, but not all loans are created equally. This time we’ll take a look at three standard options for bank loans and what you’ll need to secure them.

Microloans
+ What it Gives You: This is just what it sounds like: a small sum of cash provided by a public or private lending institution. This amount could range anywhere between $5,000 — $50,000, and can cover any business need you might have.
+ What it Takes: Though less stringent than many other types of loans, requirements will likely include a high credit rating and a specific amount of tangible assets available for collateral.

Small Business Administration Loans
+ What it Gives You: An SBA Loan (7a, 504, etc.) is arranged through the Federal government, and *guarantees* some degree of funding to any small business through a traditional lending institution — often at very good interest rates.
+ What it Takes: Above all, time! Since these loans are guaranteed, you won’t be turned away — but you might be turned off by the wait. Depending on your situation, the lengthy application process may take longer than you (or your business) can stand.

Equipment Loans
+ What it Gives You: When the money you borrow is going directly toward something that can be “collateralized,” your loan is seen as less risky to the bank, so they can afford to offer you more. Equipment loans can range in the Millions of dollars in some cases.
+ What it Takes: Collateral is an obvious priority here, but due to the large sums of money changing hands, that’s not all. Requirements typically include excellent credit, capital for a down-payment, a solid business plan and a proven track record.

Making Your Decision
The most important thing to consider in your search for a bank-backed loan is that the bank is in the business of avoiding risk. The more evidence you can present to make your business a safe “bet,” the easier it will be for the bank to approve your loan. So the question is this: what sort of evidence you can produce — and how much?

When you first consider starting a business, it’s easy to get carried away with the “what if” that comes with outside funding.

“What if our first office was large enough to impress large clients?”
“What if we could start by hiring all of the top industry professionals?”
“What if we didn’t have to risk our livelihood?”

These aren’t just dreams. They’re valid considerations; definite possibilities. A sizable investment in your company’s foundation could give you a great head start. And depending on your area of expertise, it might be absolutely necessary.

But “what if” you can do it yourself?

It’s not without it’s own dangers, but if you have the necessary amount of personal savings to fund your startup, writing a loan to your own new business venture just might be the way to go. Here’s a few reasons why:

Urgency
When you’re spending your own money, the ticking clock is loud and clear. You touch and feel every dollar as it leaves your hands. It’s not for the faint of heart, but the sense of urgency this instills in your daily business can provide priceless motivation. It’s not just your new business on the line, it’s your immediate financial future.

Speed
The time it takes you to launch your business could be the difference between success and failure. All too often, a small business with all the right ideas and resources meets its demise due to its reliance on pursuing startup capital. When you hold the purse-strings, the only thing you’ve got to wait for is confidence.

Simplicity
There’s nothing more cut-and-dry than relying on yourself. The legal process is significantly less complicated. Your risk is self-contained. And the best part — when you succeed, you keep it all for yourself.

So how do you know if you’re prepared to finance your small business yourself? In the end only you can decide, but an experienced small business professional will help you get started by assessing factors like your initial overhead and the profit potential of your business. Though the process is much easier than arranging outside funding, it’s still important to work with a small business attorney to assure your arrangement is set up to protect you and your business as you move forward.

Now what if you made an investment in yourself today?

No successful entrepreneur goes into a startup business without a vision. Whether it’s a five year plan or a lifelong dedication, every great small biz is built around a goal — and a commitment to fulfilling it. Unfortunately, a lot of businesses get it wrong from day one.

The incorporation process is a business owner’s first opportunity to start forging a long term legal partnership — but all too often, entrepreneurs end up with nothing more than a frugal fling. The following are a few questions that should help you find that special someone to meet your legal needs.

Are they a good listener?
Is your legal partner available for private counsel? From the time you incorporate, an attentive legal partner can make a big difference. By analyzing your overall business structure from the start, they can identify potential liabilities that could be remedied before they ever become problems. Ideally, you’ll want to have the freedom to inquire with your attorney about the legal consequences of your business decisions.

Do they have a dynamic personality?
Does your lawyer have a wide variety of legal experience? If you’re looking for a long-time match, you’ll want a legal partner who’s prepared to tackle the different areas of law that affect a business, including labor/employment, contract law, taxes, insurance and intellectual property to name a few. Many factors will come into play once you’re incorporated.

Are they good with money?
Does your law firm inform you regarding the financial impact of your legal decisions? Attorneys who are accustomed to working with larger corporations may be less sensitive to your budget constraints as an entrepreneur. Be sure to monitor their billings closely.

Have they been around the block?
Has your legal partner worked with clients from a variety of different backgrounds? A broader perspective of this sort can be helpful, as it allows your attorney to apply the lessons learned in other industries to the ones you may face in your future.

Do you get along with their friends?
Can your attorney connect you with the rest of the professional experts you’ll need to round out your business team? A lawyer that has strong relationships with accountants, bankers, financial planners, insurance agents, business consultants, government contacts and other professionals can be a big help in constructing your small biz “entourage.”

And lastly… do they open doors for you?
Can your legal partner connect you with the rest of their clients for business networking?Referral business of this sort can be a great way to build your client base in the early stages of your new venture.

The ideal law firm can do much more than file your incorporation with the state. They can support you. They can connect you. They can assist you in practically every aspect of your business. So choose wisely — incorporating your business is just the first of many big dates.