If you’ve got a small business or a start-up and you’re new to the world of business finance, it can be a little overwhelming. You need an injection of funds in order to grow your business, but where do you look for a loan? It can be very difficult for small businesses with no accounts and no track record to get an affordable loan, unless they know where to look and how to go about it.
Here are the basic steps you need to follow to find the right loan provider, apply and get your loan approved:
Step 1: Work out exactly what you want, and what you can afford to repay
Before you even attempt to shop around or apply for business loans, you need to crunch the numbers and perhaps sit down with a financial adviser to pin down exactly what you need. Consider all of your costs to see how much money you actually need for your plans, and then turn to terms. How much can you afford to pay back each month and how many years will you need in order to repay in full? Will you want the opportunity to repay early, and will you be happy with a fixed or a variable rate?
Step 2: Make sure your business plan is rock solid
The key to success in business loan applications is often the strength of the business plan. The lender will want to see a plan that is thorough, comprehensive and realistic, with plans for failure as well as success and plenty of facts to back up ideas and forecasts.
Step 3: Run a credit check
It is absolutely crucial to know your business credit rating before applying for a loan, as this is something lenders will definitely want to see. Many companies offer free checking services, and if you don’t yet have a business credit score then you should make sure your personal rating is as high as possible.
Step 4: Shop around
Armed with your exact requirements and all you need to apply, you can now start to scour the market for the best deals. You can find all the information you need quite quickly online, with comparison services being particularly helpful. Look for the cheapest rates, the terms that suit you and also consider your chances of being accepted.
Step 5: Prepare your application and practice your pitch
Whether you need to persuade the lender on paper or in person, it’s important to prepare your application carefully. Detail how every penny will be spent, make sure you have all the facts and figures at your disposal and crucially – always be on time if you have an appointment at the bank.
Step 6: Consider negotiating
If you’ve been offered a loan, congratulations. However, if the terms or the rate don’t quite suit you, don’t be afraid to ask the bank to consider a different offer. If you can provide a knowledgeable, fact-backed challenge, you never know – you may end up negotiating a better deal.