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New small businesses that need a loan to get started are in a classic catch-22: lenders will want to see a proven track record before they lend you any money, but you can't establish the track record until you get the loan. As a result, a lot of new owners have to turn to alternate sources of financing, such as selling personal assets, borrowing from friends and relatives, or taking on partners or investors.
As part of any effort to raise money for your business, you should develop financial data on your business that you should be prepared to give to a lender. Here's a list of information you should compile:
- a personal expense budget for one year (see making a family budget)
- a personal financial statement
- estimated startup costs of your business (see costs - setting up the business)
- estimated first-year business expenses
- estimated total cash requirements
- the amount of money you can invest and the amount of money you need to borrow
- estimated break-even point (see analyzing your break-even point)
- a business plan (see building a successful business plan)