Tips to help you secure a Business Loan16 July 2020
Once you have an idea for a business and a team of professionals working by your side, your next big step to get your start-up off the ground will be to secure funding, likely through a small business loan. While banks and other financial institutions offer a wide range of financing options for businesses, you may still face challenges securing funding if you go into lender meetings unprepared.
Taking the right steps before applying for a small-business loan will reduce the likelihood of your application being rejected. At Ezilend, we want to help you to get the financing that you need to start your business. To help get you started, here is a look at a few steps that you can take to improve your chances of securing financing for your start-up.
Have a Good Business Plan
Before you apply for a small business loan, you must take the time to make a detailed business plan. A business plan serves as a roadmap that explains what your business does, how you plan to market your product/services, and it forecasts projected growth.
Making a business plan will not only show lenders that you are serious, but it also gives you time to think about your long-term goals. Once you know more about your business and goals, you will be more prepared to meet with lenders. You will have already contemplated the answers to most questions a lender might ask. Your business plan will also help give lenders a sense of what your business does and how you plan to turn a profit, improving your odds of securing a loan.
Determine Your Long-Term Goals
After creating a business plan, you will also need to map out your long-term goals for your business. Lenders want to see that you have a vision for your business, and simply saying that you want to make money won’t cut it.
You will need to take time to think about how you want to grow and expand your business. What proactive steps do you plan on taking to achieve your goals? Mapping a five-year timeline of steps you plan to take to grow your business will give lenders a concrete idea of how you plan on turning a profit. Lenders want to see proof that giving you a loan is not a risk. So anything that you can do to show that you have thought your business idea through and are prepared to grow your business can help you secure a loan.
Bring The Right Documents
Nothing looks less professional and ruins your chances of securing a loan more than not being prepared for a meeting with a potential lender. This makes it critical that you gather the right documents to take to your meeting and that you have them organised so that you can quickly find what you need at a moment’s notice.
The documents you most likely need include:
- recent tax returns,
- bank statements,
- proof of insurance,
- letters of incorporation, and
- any applicable business licenses or other professional documentation.
You do not want something as basic as not having the right documentation with you derailing your chances of receiving a business loan.
Be Ready to Talk Numbers
It is also critical that you are prepared to talk numbers. You will need to know your business or business concept’s financials inside and out before your meeting to prove that you know what you are talking about. This demonstrates that you have a plan for your business’s financial future. Be ready to discuss:
- your business’s ongoing costs,
- how much you have invested in your business,
- whether you have any investors,
- how much money you anticipate needing, and
- how long you anticipate it taking to pay back the loan.
Knowing the financials of your business can help a lender to decide whether or not you will have the means to pay back your loan. So showing that you are prepared and have done your research can demonstrate that your business is a good investment.
Taking the time to prepare before applying for a small business loan will give you the best chances of securing financing. Contact us to learn more about how you can improve your chances of securing approval for a business loan.