Using personal loans and credit cards to raise money for moneymaking deals is one way of financing your business 100%.

However, if you apply for a business loan, your bank will normally only be prepared to lend you an amount equal to that which you can put up front yourself.

So, as always, money breeds money. If you have £10,000 to finance your new business, but feel that you would get off to a much better start if you had access to £20,000, borrowing the other £10,000 would not normally be too much of a problem. Any bank manager will normally be willing to lend you this kind of money if you have half of the total amount required in the first place. This is providing that you can supply the bank manager with a thoroughly researched and properly documented business plan and cash flow forecast for the first 1 – 2 years of trading.

However, most budding entrepreneurs will have little or no capital. This can be very frustrating when you know you have a good money earning idea and have worked out how to set up and profitably run the business.

So, unless you have enough money of your own to finance half the business start up costs, it is best to avoid a business loan. Instead apply for a personal loan. Tell the bank it is for a home improvement or the purchase of a new car, or for major property repairs. Provided that you can satisfy the bank that you are a good credit risk, they are not particularly concerned as to exactly what you will do with the money.

Because you can borrow smaller sums from different banks, you do not even have to be particularly concerned if you are unable to secure the full sum from one source.

Remember though, that if you are applying to a variety of sources try and get the applications in on the same day. This way, when the lenders do a check on your existing borrowing, there won’t be any information, which they can obtain to show that you are borrowing anything other than the amount you are applying to them for.

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