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The chance of getting a loan would almost be close to zero if your self storage unit is newly established.
Most of the banks do not even consider loans for companies if they have been in business under 3/4 years.
Banks show no interest to give loans to start-ups as they do not have adequate credit history.
It is the difficulty a small business faces in its initial stages.
Owners of small business have to be more creative in obtaining financing for their ventures and look for alternatives.
One option to consider is borrowing from your friends and family.
This is one of the best ways to financing your unit in the initial stages.
You can get these loans at a cheaper rate and repayment terms are more forgiving.
Your parents can give you a loan at a lesser interest rate.
In case of friends they might give you a loan at a rate little higher than what they get in their saving account.
But generally these rates are lower than what bank actually charges.
Getting a loan from bank is difficult but you can still check with your bank to get a loan to your self storage unit.
They may consider approving your loan application if they are impressed with your business model.
Even though the chances are less you need to talk to your bank since they are very helpful and forgiving lenders.
Perhaps credit cards is the easiest type of loan to obtain.
This is the main financing choice of small businesses of 1 to 4 employees.
But the problem with credit cards is higher interest rate.
The rate can be 15 to 20%.
This obviously affects profitability and cash flow.
The main advantage of this financing is the ease of borrowing.
There is no system of checks and balances and no procedure to follow.
Investing the cash back into the business is another form of financing.
This should be done consciously with a clear idea for what the money should be used.
Line of credit could be another option to consider.
It could be in the form of a home secured loan or business asset.
In this case, bank utilizes the company's property ( accounts receivables, equipment, etc) to ensure that they can get significant value if default happens.
This is also an easier form of loan.
Private equity firms too provide financing to the small businesses.
These are called private investors or venture capital firms that would lend money in return for some direct control into your company matters.
This way they hope they can get their money back from your self storage unit.
You need to be careful in choosing these firms.
You need to ensure that they are familiar with self storage business.
When chosen carefully this is a good financing option.
These firms look for a good track record before they invest their money.
Hiring an investment banker would be a good advice.
Though you need to pay for the banker for his services, it is a worthy investment as the banker could take care of attending this form of financing and thus allowing you to keep focused on operations of the storage unit.
You would require a formal business plan for this option.
Angel financing is from freelance financiers who are willing to lend loans to small businesses.
They can lend anyway from $50,000 -$500,000.
They may also invest in companies that might be doing good business but yet not established enough to obtain a bank loan.
One benefit of Angel financing is that the experience they can bring into the business.
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