Getting a business loan is far more difficult than securing a personal loan, as there are much higher risks when lending to a business. There are stricter rules in place for getting a business loan, which became even harder to qualify for after the financial crisis.
Therefore, being a small business owner and securing a loan to finance your business is rarely easy. However, there are ways to help improve your chances of getting a business loan.
Clearly explain the plans for the loan
When talking to a lender you must clearly explain the plans of the loan and how it will impact the business. This basically means providing a solid business plan that can explain how the loan will be used in your business.
Keep the plans realistic and watertight – pay close attention to projected revenues and accounts, even consider hiring an accountant to give the figures a look over.
Review your credit history
When starting up a new small business, applying for a loan faces much more scrutiny from banks. They will want to know about your personal credit history, so be sure to review this and do whatever you can to make improvements should it be in poor condition.
For those unaware, you can request a credit report to ensure everything is in good order and there are no mistakes or unexpected surprises when reviewed by the lender. If your credit history isnt great, youbll need to take time to repair it before applying for a business s loan.
Show that you can repay the loan
Every lender wants the borrower to demonstrate their ability to repay the loan, so this should be part of your business plan. Youbll need to make predictions about your revenue and explain current cash flow and clearly show that the business is growing – nobody wants to finance a failing business.
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