Many people who want to start their own business need an injection of financial capital at the start of a business; The main source of financing for entrepreneurs is business loans.

Let’s take a look at what you should expect if you plan to apply for one.

First of all, you should know that most lenders have second thoughts when it comes to lending money to a first time business owner. At this point, you are considered a high-risk business and should start your loan negotiations armed with a few assets. Of course, the ideal option is to run your business for a few years, even out of your home, and make a good profit before approaching a bank for a loan.

This shows that you have the ability to earn money and that your business will not fail before the Open sign appears on the door. But if this isn’t possible, if you need the cash before you can get started, you may need to offer some form of collateral. The warranty can be anything from your car to your house and everything in between. Depending on the size of the loan, you may need some pretty hard assets as collateral. The lender is not interested in whether or not your business will make money, other than the extent to which it will allow you to pay them back on time. They just don’t want to lose the loan, so they’ll have to find some way to back it up.

Backing your loan with assets, if you have them, is a good option, as long as you’re confident enough in your financial situation to ensure you won’t lose your collateral. If you don’t have enough assets to replace your loan, another option is to find a co-signer. Chances are you won’t get as much cash as you would if you had the assets. But having someone with good credit who is willing to sign your loan and promise to pay if you don’t can be the factor that gets you through the door. This is a great way for friends and family who believe in your business to help you get it off the ground, even if they don’t have the money to lend you up front.

When it’s time to borrow, do some shopping around between banks and credit unions, and don’t stop until you find the lowest possible interest rate. You’re already betting big here: minimize the amount you’ll have to pay back by doing your homework and choosing the company that offers you the best deal. If you can’t get enough to cover the start-up expenses of your business, consider borrowing some of the cash from a friend or relative if you can, or even asking for help from investors, such as customers who believe in your business. Don’t accept a high-risk, high-rate business loan just because it offers you the highest amount.

The Small Business Loan: The first step in a long chain of financial events. If you take the right step, it could be your leap into the business world.