Getting the right loan for a new business in today’s borrowing environment is extremely tough. On top of that, there are plenty of unscrupulous suppliers offering services to help you find your way to a loan. Every day, I receive a phone call from a cash-starved entrepreneur who has wasted thousands of precious dollars on some seemingly-related junk that won’t make a difference in the long run. Here’s what you have to watch out for:
1. Costly business plan writers.
Ah, the business plan. Hailed as one of the most important documents for businesses, it can be a major trap for startup owners. Depending on the type of loan that you are applying for, you may not even need a business plan or business forecast before the application process begins. Be wary of companies that want to sell you an expensive business plan or financial forecast in a neatly buttoned up package. If you’re paying a hired gun to do the work for you, you may be wasting more than just money; being part of the business plan development ensures that you’ll actually know what’s going on in your business and the direction it’s headed for the foreseeable future. I’ve met with countless entrepreneurs who have no idea what their business plans and forecasts say.
2. Hyped-up business credit services.
No startup lender will expect you to have good business credit. While business credit can be helpful as your business continues to grow, it doesn’t make a difference for a startup. Watch out for scams from companies that will sell you a business credit service, as you’ll just be throwing away precious time and money.
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