Although the job market has improved significantly since 2008, competition is still intense and today’s graduates face high unemployment rates. In a 2010 study released by the National Association of Colleges and Employers, only 24.4 percent of graduates had a job waiting for them after graduation. Although that number is up from 19.7 percent in 2009, and the 2013 numbers could be even higher, that still leaves a significant number of graduates unemployed.
Additionally, many of these recent college graduates are also facing a lot of debt, which makes finding a job that much more important.
Entrepreneurship as a Solution
Rather than put all of their hopes on the possibility of finding employment, many recent graduates are creating their own futures by starting small businesses or working as independent contractors or freelancers.
Depending on the type of business, it is possible to become an entrepreneur with relatively low overhead and startup costs. For example, you could start a freelance writing business for little more than the cost of a computer, a good office suite (like Microsoft Office), internet access, and a website.
On the other hand, if you start a business like a food truck, or a bakery, your costs could be significantly higher and you might need to take out a small business loan.
Small Business Loans
Small business loans make it possible for entrepreneurs to access the funds they need to start and grow their businesses. These loans could be smaller than the loans that large, established, corporations receive, and they could also have lower interest rates.
These loans are available through private banks, government entities, and even through major corporations looking to invest in new companies. The United States Small Business Administration (SBA) has a wealth of information on how to find small business loans. The SBA also has as a list of loans, grants, and possible investors.
Qualifying for a Loan
Qualifying for a loan depends on the institution servicing the loan, but most lenders will require you to submit a both a personal as well as a business credit history. If your business is brand new, or does not have a credit history, then whether or not you qualify for a loan will depend entirely on your personal credit.
As we stated before, many college students are graduating with debts. In fact, the average college student graduates with $35,200 in debt. Some of these debts are government or private student loans, but another portion of them are personal loans and credit cards.
Having a large amount of debt, or a lot of credit account, even if you are current on your bills, can actually look bad in a credit review and ruin your chances of getting a small business loan.
This is why it’s important to effectively manage your credit.
Managing Your Credit.
If you have multiple student loans, you can often consolidate them. This makes five loans, and five different loan accounts, look like one single account. Loan consolidation can also adjust your interest rate and give you lower monthly payments, all of which look better on a credit report.
If you have multiple personal loans and credit cards, you can work with a credit counseling company to negotiate better rates and even consolidate some of the debt. Many of these companies have a proven track record of successful negotiations with creditors, and have offices across the country. These offices can also communicate with each other and share information.
For example, let’s say you attend Westminster College in Salt Lake City, Utah, but your permanent home is in Binghamton, New York. To get a leg up on your credit, you can start working with a company like Lexington Law in Salt Lake City before you graduate. Then, after graduation, you can continue working with the office in Binghamton, or wherever you end up.
Then, if you decide to take out a small business loan, you will already have cleaned up your credit history and improved your chances of qualifying.