5 tips to improve your chances at securing a business loan
As an entrepreneur, you have probably spent a fair share of time sitting across the desk from a financial lender, convincing him or her to give you the loan you require to kick-start your business. While this may sound like it’s placing you at the mercy of the lender’s whims and fancies, you have to pause and reflect on one thing:
What if it was you on the other side of the table? Would you then be willing to put your money into your company in question?
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If the answer is an unbiased yes, then you have nothing to worry about. However, if you had to think twice, then maybe you should look back and realign your plea structure, to ensure that it improves your chances of getting a business loan in the future.
Here’s some advice you should consider.
Begin at the beginning
The entire approval process doesn’t begin and end in a day. It isn’t as simple as visiting a bank, filling out a form, and getting it sealed with a stamp of approval on the spot. The process to gain approval for your business loan could take days, weeks, and even months. You will need to come up with a formative plan, track down potential and probable lenders, and then secure a series of meetings with them. Hence, it isn’t productive to wait till your business has hit that rocky spot in numbers, or till the last minute before you wish to launch a new business. The best time to begin looking into this process? Right now.
Make a list and check it twice
As the saying goes, don’t put all your eggs in one basket. As an entrepreneur, you know better than anyone else the importance of having a backup plan. The same rule applies when it comes to dealing with people who could either help make or break your business. While you may have singled out a potential money lender who you believe is most likely to granting you that loan, it is still prudent to have two or three other lenders you could reach out to if the first one doesn’t fall through.
Don’t hold back on information
One thing you need to keep in mind while approaching a lender for a loan approval is the fact that the latter are as much at risk in this transaction as you. The lenders are faced with the task of putting their money into a company without having a sure-shot conviction that they will enjoy the benefits of the returns in the long-run.
To this end, it is entirely on your shoulders to alleviate their fears and provide them with a fool-proof plan as to how you wish to invest and spend that money. You have to be ready to answer even the most minute and inconsequential questions and doubts, because by the end of the day, you’re the one who needs to impress them.
Be prepared to share your financial details
A situation could arise where the lender requests to see your personal financial details, which may clash with the interests of your company. However, that is a bite that you will need to allow in order to secure the much-needed approval, because they are assessing your risk as a borrower. As a result, you should be prepared to share all your financial details with them, as well as that of your company’s.
Get advice from financial experts
It is prudent to approach financial advisors like SBA counsellors for their advice on how you should go about asking for a loan in the first place. Many banks have begun to offer these services as well, all of which aim to help you form a structured plan, to pen down the exact amount you need to request for as well as the different factors you need to set aside particular sums for as well. Moreover, your request will become all the more credible when you convince a potential lender that your plan for the loan has been previewed and suggested by professionals in the same field.
To sum up, getting a loan for your business is definitely no child’s play. You have to possess the ability to convince another individual or organisation that lending you money will ensure them minimum risk and maximum returns. Do you have more suggestions for the same? Let us know in the comments below!
