Growing your business can be an exciting time. It may also mean you need to come up with some extra cash to cover large expenses. Whether you’re looking to buy new equipment or lease a larger commercial space, a small business loan may be able to provide the funding you need to reach your goal.  

<p>Growing your business can be an exciting time. It may also mean you need to come up with some extra cash to cover large expenses. Whether you’re looking to buy new equipment or lease a larger commercial space, a <a href="https://www.happen.com/business-loan/aof-loans"><u>small business loan</u></a> may be able to provide the funding you need to reach your goal.  </p><h2>4 steps to take before getting your first small business loan </h2><p>Business loans can be tricky, especially for new business owners, but there are some steps you can take before getting your first small business loan. Here’s a closer look at what to do before getting your first small business loan.  </p><h3>1. Research what it takes to qualify </h3><p>Small business loans from banks and credit unions often have strict requirements. For example, many lenders only offer loans to businesses that have been in business for six months to a year, and some may require a minimum of at least two years in operation.   </p><p>The annual revenue your business earns is also a deciding factor. Many lenders require a minimum annual revenue between $50,000 to $250,000.  </p><h3>2. Prepare a business plan </h3><p>Virtually any issuer of business loans, from a local financial institution to the U.S. Small Business Administration (SBA) to a private partner or investor, will want to see a business plan that shows how you plan to grow your company (and how a loan can enable that).  </p><p>A good business plan includes a “SWOT analysis” that spells out your company’s strengths, weaknesses, opportunities and threats; revenue and earnings projections for the next one to five years, plus any costs of production, distribution, and marketing.   </p><p>The <a href="https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan"><u>SBA provides advice and examples of effective business plans</u></a>. And if you need additional guidance, the SBA-affiliated nonprofit <a href="http://score.org/"><u>SCORE.org</u></a> may be able to pair you with a mentor who can give you the benefit of real-world experience. </p><h3>3. Create a balance sheet </h3><p>Lenders typically want to see documentation of your company’s assets and liabilities, spelled out in a formal balance sheet. Assets can include equipment you own, product inventory, intellectual property and money you’re owed (accounts receivable). Liabilities include debts, outstanding leases on equipment or facilities, payroll, and employee benefits costs.   </p><p>Running these numbers can also help you determine if you’re able to afford the cost of a loan.  Keep in mind that a business loan is another monthly expense on top of your existing operating costs. While the loan may provide your business the opportunity to grow, and ultimately earn more income, this may not happen overnight.  </p><p>If you’re unsure how to create a balance sheet, a financial professional, like a certified public accountant (CPA) can help.  </p><h3>4. Check your credit score </h3><p>Lenders generally check your credit when considering an application for a small business loan — whether you’re applying with your own credit or using <a href="https://www.happen.com/resource-center/business-loan/how-to-build-your-business-credit"><b><u>business credit</u></b></a>. Before applying for a small business loan, it’s a good idea to check your credit report to know where you stand.  </p><p>Borrowers with poor credit are less likely to qualify for the best rates. So if your credit isn’t in the greatest shape, you may want to consider holding off on applying for a loan until you can improve your score.  </p><h2>Determine which type of small business loan is right for you </h2><p>Business owners can choose from many different types of small business loans. Finding the right business loan depends on many factors, including how long you’ve been in business, the financial health of your business, your credit, and how much you need to borrow.  </p><p>Here’s a closer look at some of the common types of small business loans. </p><h3>Small business loan </h3><p>Traditional small business loans are available from banks and credit unions. With this type of loan, you’ll generally be able to get competitive interest rates, large loan amounts, and long repayment terms. To qualify, you’ll likely need consistent business revenue, a business that’s been established for at least two years, and good credit.  </p><h3>Government business loan </h3><p>The <a href="https://www.happen.com/business-loan/sba-loans"><b><u>SBA offers low-interest small business loans</u></b></a> with long repayment terms. Under the 7(a) program, the SBA guarantees some types of small business loans issued through banks. The SBA also has a 504 loan program that can help you cover the cost of big purchases needed to grow your business like buildings, equipment, or land.<sup>1</sup>  </p><h3>Nonbank small business loan </h3><p>Traditional lenders like banks and credit unions may not be the best option if your business hasn’t been around long enough to qualify. Entrepreneurs looking to <a href="https://www.happen.com/resource-center/business-loan/guide-to-business-financing"><b><u>finance a startup business</u></b></a> may have better luck applying for a small business loan from an online lender as online loans may have few restrictions to qualify. Online lenders often offer fast funding, sometimes as fast as the day you apply for the loan, but you’ll likely pay interest rates than with a bank or credit union. </p><h3>Microloan </h3><p>Microlenders are nonprofits that offer small, or micro, loans to businesses. Loan amounts are typically under $50,000 and the application process is detailed and lengthy. Micro loans often require lots of upfront work, like presenting a detailed business plan, financial statements, and an explanation of how you’ll use the loan. If you’re trying to fund a startup with no operating history, lack collateral, or have poor personal credit, a microloan offers an opportunity to borrow cash. </p><h2>What do you need to apply? </h2><p>Lenders may have different requirements during the application process. You’ll likely need to provide some or all of the following information: </p><ul><li><p><b>Business information:</b> Applications typically require you to share basic information about your business, including business name, address, and employer identification number (EIN). You may also have to provide a business plan or other documentation about your plans to use the loan money.  </p></li><li><p><b>Business owner details:</b> Whether you’re a solo entrepreneur or own a business with others, lenders require you to share personal information about each business owner, like Social Security numbers and addresses.  </p></li><li><p><b>Financial statements: </b>To help gauge risk, lenders generally require documentation about how your business is doing financially, like annual revenue, profit and loss statements (P&amp;L), tax returns, and bank account statements. You may need to provide this information for the business as well as any business owners. </p></li><li><p><b>Potential collateral:</b> Lenders may want you to offer assets they can seize and sell in  case you fail to repay your loan. This can include property owned by your company or, in a manner comparable to secured car loans and mortgages, equipment or other assets being financed through the loan. </p></li></ul><h2>Alternatives to small business loans </h2><p>Not all business expenses require a small business loan. And in some cases — like if your business is new or you have less-than-perfect credit — you may not be able to qualify for a business loan. If you still need access to cash, here are some options to consider:  </p><h3>Business line of credit </h3><p>If you need to fund cash flow for day-to-day expenses, a business line of credit may be a good choice. It lets you make purchases or issue checks against a preset borrowing limit, and to pay back those sums as you’re able, so that you pay interest only on the funds you use. This flexible form of financing can help you cover expenses like payroll or unexpected repairs and may be easier to qualify for than a small business loan.  </p><h3>Small business credit card </h3><p>If you don’t yet qualify for a small business loan, a business credit card could be a good option — especially if you only need to borrow small amounts of cash. Look for zero-interest credit cards or cards with perks that can help grow your business, such as cash back or travel rewards.   </p><h3>Personal business loan </h3><p>If a small business loan is out of reach, you may still be able to borrow money as an individual using a personal loan. Just keep in mind that you’ll likely still need good credit to get the best rates. </p><h2>The bottom line </h2><p>For those who qualify, small business loans can be a helpful tool to finance expenses like new equipment or other costs to help expand your business. Choosing the right fit for your business and financial situation can be tricky — especially if you need to seek funding from an online lender or microlender.   </p><p>Before applying for a business loan, it’s also important to make sure you can afford the monthly payments. If you’re not sure which type of small business loan is right for your business, check with a trusted business advisor, like a CPA. </p><hr/><p>1. <a href="https://www.sba.gov/partners/lenders/7a-loan-program/types-7a-loans">https://www.sba.gov/partners/lenders/7a-loan-program/types-7a-loans</a></p>

Some small businesses seem to thrive no matter what the economy is doing. What’s their secret? Here are a few business ideas to consider and tips to help you bake some resiliency into your venture.

<p>If you’ve been thinking about starting a small business, going freelance, or becoming a sole proprietor, you’re not alone: According to the U.S. Census Bureau, Americans submitted 5 million new business applications in 2022 (down only slightly from a record high of 5.4 million applications the year before). </p><p>But what type of business will thrive in this (or any) economy? Is there such a thing as a recession-proof small business? Though there’s no foolproof answer, some small businesses tend to fare better than others no matter what the economy does. </br></br>We’ve gathered some proven, recession-proof business ideas to help you prepare in the event of a downturn, plus a few tips to help you bake some resiliency into your own new (or existing) venture.</p><h2>What is a recession-proof business?</h2><p>Growing a business in any economy can be a challenge—and no venture is completely recession-proof. That&#39;s because almost all <a href="https://www.happen.com/business-loan/aof-loans">new entrepreneurs require some amount of funding</a> along with a raft of skills to launch, market, and keep a successful business running efficiently.   </br></br>However, some businesses seem better equipped to withstand a recession. For example, businesses with built-in, consistent demand for its products and services are typically less vulnerable to the ups and downs of a tight economy. And some new ventures may outperform during an economic downturn because they were created to address the needs and pain points brought about by recessionary times. </p><p>Operational skills also make a difference, especially during difficult economic periods. Developing a solid marketing plan, mastering financial skills and money management tools, and being flexible to the demands of starting a new business all contribute to a venture’s ability to endure. Starting a business can be simultaneously exhilarating and demanding. Thought and planning on the front end will save you some difficulty later. </p><h2>7 recession-proof business ideas to explore</h2><p>If you want to go into business for yourself and are looking for inspiration, consider the following seven business ideas as a place to start. While these businesses aren’t completely immune to slowing sales or fluctuating supply and demand during a recession, they do have a track record of holding up when the economy is down. They may also spark more ideas about where to look for other opportunities that sound appealing to you.</p><h3>1. Discount, Bargain, Or Used Goods</h3><p>Affordability is a good look in an economic downturn. But even without a recession in play, thrifting and bargain hunting are gaining popularity. According to U.S. Census data, retail sales at used merchandise stores are on track to top $24 million in 2022, up from $16.4 million in 2020. Online reselling, retail pop-ups, and consignment businesses are capitalizing on this recession-friendly trend, which also helps sellers raise a few dollars in a tight economy and helps make for a more recession-proof business. Discount, bargain, and used goods aren’t limited to luxury items or vintage fashion. The key here is serving up in-demand goods at affordable prices, which is a decent business model in any economy but an especially timely one if the market starts to go south.</p><h3>2. Home Repair and Maintenance</h3><p>Recession or not, the demand for home repairs and the skilled professionals who perform the work continues unabated. While new home construction and high-end home renovations may lag during an economic slump, fixing a leaky pipe will always be a priority for homeowners. Along with home repair and maintenance contracting businesses, do-it-yourself products that help homeowners make their own repairs may prove to be smart recession-proof businesses ideas to consider.</p><h3>3. IT and Technical Services</h3><p>Regardless the size of business you may be focused on serving, most can’t operate efficiently without some hardware, software, or technical service providers. Online sales and customer management platforms, remote networks, and cybersecurity issues are only a few essential aspects of business technology. Business-to-business services that support and maintain technical operations or innovate for new efficiencies tend to do well when economic waters get rough.</p><h3>4. Accounting and Financial Services</h3><p>For consumers and businesses alike, taxes and finances are always top of mind and a constant concern. When the economy is in flux, that concern may intensify. In fact, a growing number of new businesses and self-employed workers may translate into an increased need for more accountants and bookkeepers. Economic changes may also create demand for more accessible financial and investment advice as people work harder to keep their businesses and personal retirement savings on track.</p><h3>5. Auto Repair and Maintenance</h3><p>Car maintenance and repair are in consistent demand, making this a recession-resistant market—and largely a recession-proof business. While new vehicle sales slow down and people hold onto their vehicles longer during a recession, the need for services such as maintenance, repairs, and mobile auto-detailing often expands. Because a slow economy could mean less money to spend on upgrades, recession-savvy entrepreneurs may want to focus on offering the essentials over luxuries. </p><h3>6. Food, Beverages, and Groceries</h3><p>People must eat. And while some food-related businesses are not startup-friendly in a down economy (supermarkets and swanky restaurants are good examples), affordable restaurants, food trucks, bars, coffee and tea houses, and food delivery businesses feed a hungry populace. Bonus points for businesses that address immediate needs: good food at budget prices, small indulgences that don’t break the bank, or comfortable places to gather with friends, for example.</p><h3>7. Professional Consulting Services</h3><p>Generally, most large businesses look for ways to reduce overhead during a recession, sometimes by reducing headcount. Freelance workers that can quickly flex their schedules to pick up the slack may find themselves in high demand. Consultants who can help navigate a difficult economy may also find a niche. However, starting or running a professional consulting-oriented venture in an economic downturn can be tricky: Since spending is down, these types of business services must deliver significant, measurable value to attract and retain clients.</p><h2>Businesses that work in a recession</h2><p>The seven types of businesses highlighted above aren’t the only potentially recession-proof businesses out there. Small businesses that can quickly offer products and services in response to recessionary pain points can often find a market of ready and willing buyers. </p><p>For example, during the pandemic (which included a brief recession surrounded by major economic disruption), in-person fine dining establishments were hit hard. In response, online ghost kitchens offering a variety of delivered foods from a single location and restaurants that quickly pivoted to take-out found their moment. </p><p>Generally, recession-proof businesses often have one or more of the following characteristics: </p><h3><b>Adaptability</b> </h3><p>Small, nimble startups that can quickly lean into new opportunities brought about by recession have an edge. Laid off workers freelancing from home may need childcare that’s flexible instead of full time. Consumers who feel anxious about their finances may seek out the help of a financial advisor. Adaptability is also an asset when the economy picks up and needs change again.</p><h3><b>Recession-proof market</b></h3><p>Consumers with ultra-high incomes may not feel the pinch in a recession. Additionally, people who work in recession-neutral fields like healthcare and the government may have stable employment and steady incomes despite the economy. Some needs are essential: food, housing, clothing, and health.</p><h3><b>Access to capital</b></h3><p>Lean and mean is a mantra for recession-proof businesses, but access to business loans and credit may be what gets your business off the ground or helps you through a rough patch. Finding a business loan that will work for you can give you options you wouldn’t otherwise have.</p><h3><b>Unique delivery</b></h3><p>Online streaming services got their start during the Great Recession of 2007/08. Why? New technology made it possible for people to consume a lot of entertainment at a low cost without leaving the comfort of home—a perfect fit for a tight economy. Putting a new twist on an already established basic business model may help you meet a need that didn’t exist before.</p><h3><b>Affordable luxury</b></h3><p>Specialty lattes have survived many an economic downturn because they’re a small indulgence most people like to treat themselves to and can reasonably afford, even when money is tight. Consumers may be hungry for small splurges and low-cost “luxury alternatives” as budgets tighten.</p><h3><b>Financial fitness</b></h3><p>Minding your margins, managing cash flow, building and maintaining credit, and tending to your business’ overall financial health is critical during a down economy. Businesses that survive and thrive during a recession don’t just find demand—they meet that demand profitably and efficiently.</p><h2>The bottom line</h2><p>Starting a business in any economy means looking for opportunities that are responsive to the market and address the pain points of the times you’re in. Checking out recession-proof businesses is a starting point. You&#39;ll also need to consider whether a business suits your talents and expertise, whether it’s conducive to running as a small business, and if there are niche opportunities worth exploring.</p><p>Creating a detailed business plan is also critical. It&#39;s important you fully understand the opportunity you’re considering and the operational challenges of making your business a success. If you need information and help getting started, the Small Business Administration’s SCORE (Service Corps of Retired Executives) program connects up-and-coming entrepreneurs with business mentors and a library of information on starting your own business.</p>

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How to get your first small business loan