TOMI Magazine November 2012

and it’s not a pleasant one — is that the lend- er knows he can repossess assets that have re - sale value. He has no way of repossessing the money an entrepreneur spent on rent over the past year.” The popularity of microloans are in- creasing. “...banks are as reluctant as they have been in recent memory to lend to busi- ness owners. The resulting scarcity of credit presents an opportunity for microlenders to gain market share.” “ Another factor - as far as I can tell— more people are starting businesses. I am speaking with a lot of people who have been forced out of the corporate world or who have given up on it in favor of starting businesses. Many of these new entrepreneurs have turned to microlenders for the resources they need to launch their new businesses.” There is much to think about and do before applying for a microloan. “We at the Intersect Fund have put together a list of the things all business-owners should have to give themselves as good a chance as possible to succeeding:  A Marketing Plan : even it it’s just a one- page document describing the business’s target market and listing a set of sales goals, it will help ensure a business own- ers uses his limited marketing resources ( time, energy, etc.) wisely.  To be registered : a business owner should determine which type of registration (sole- proprietorship, limited liability company, corporation) is best for him and secure it.  A budget : a business owner is his own boss. You will need to hold yourself ac- countable. A spreadsheet listing your ex- pected earnings and expenses for the coming year will help you stay motivated and on-task.  Good credit or a plan to improve it : many new business owners know their credit is “ bad” but are unclear about the details. Know your credit score and get copies of your reports. You can see what is awry and go about fixing it. Failing to do this will make it extremely difficult to get a loan—even a microloan—the future.  A bookkeeping system : business owners should consider investing in a piece of ac- counting software like QuickBooks; they can learn it quickly and have tidy financial statements at their fingertips. Managing a business is hard; managing one without knowing whether it’s making any money is nearly impossible. – Tonisha L. Johnson

from would-be borrowers. The worst thing a loan applicant can do is lie about his income or assets. If the numbers he gives us on his application fail to match the numbers on his tax return and bank statements, he’s told us all we need to know about whether we can trust him.” Small business owners approach the loan process as if it were a potential selling point. Excited about their business, entrepre- neurs talk more about the future success of the company rather than the current bottom line. “Another mistake applicants make is as- suming we will give them a loan based only on the profit they think their businesses will make in the future. There is a place for ambi- tious goals, but loan applicants should re- member that lenders care more about the amount of income they earn now than the in- come they think they can earn in the future.” There are lots of financial organizations like The Intersect Fund that want to help new businesses succeed. But you’ve got to help yourself first. “Before applying for a micro- loan, or any loan, for that matter, a person should complete a quick, personal finance evaluation. First, are you current on your mortgage or rent? Second, are you current on taxes and, if applicable, child support pay- ments? Third, do you have room in your budget for loan payments? A person who an- swers “no” to any of those questions has no business applying for a loan.” When writing a proposal, you think of interesting, unique ways to make yourself stand out. This too is necessary in the micro- loan application process. “A person who com- pletes the evaluation unscathed can take a couple of steps to make his or her application stand out” - shares Joe. “First, you should make sure you have a clear idea of how much money you seek and what it will pay for. For example, a person who asks for $4000 to buy a specific used food-truck is a much better bet for a lender than someone who wants $10,000 for “general expenses”.” “ Second, you should save up as much money as you can to contribute to the pur- chase for which you seek the loan. It’s safer for a lender to lend you $3,000 toward the purchase of $6,000 truck than to lend you the whole amount.” “ Third, you should know the types of things lenders are most willing to help pay for. It’s always easier to lend money for assets with re-sale value (like equipment, buildings, property, automobiles, etc.) than for expenses like rent, payroll or advertising. The reason —

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