Three Tips to Make It Easier to Get a Business Loan

Getting a business loan is often a must for a start-up business. The task is all the more difficult at this stage as bankers are generally more demanding of new borrowers.

Some elements can however play in your favor. Here are some suggestions to help you in your process and improve your chances of success.

While the entrepreneurs are very animated and passionate about their project, the bankers analyze the requests more from the angle of the financial arrangement. You will need to have a more rational approach, based on elements that bankers will understand.

You will need to have a more rational approach, based on elements that bankers will understand.

Treat your credibility

Treat your credibility

Having credibility is necessary to put your banker in confidence. Your credibility is built through the seriousness of your efforts and research, the clarity of your ideas and the strength of your business plan.

Feel free to support your claims with facts and figures. Also remember that the banker may not be an expert in your field.

That is why it is necessary to popularize, to concentrate on a unique idea and to go straight to the point. Your forecasts should clearly demonstrate the profitability of the project for you and the bank. They must be realistic and based on solid data.

Your forecasts should clearly demonstrate the profitability of the project, for you and for the bank

Have a good business plan

business plan

The business plan is the key element on which the analysis of your loan application by the banker will be based. The challenge, then, is to provide the details to present yourself – you, your business, your team, and your business strategy. The business plan must include the following basic sections:

  • Company Description
  • Presentation of the management team
  • Financial plan
  • Marketing plan
  • Production plan

A good business plan is based on valid and validated data such as market research, realistic financial forecasts and accurate observations of the forces involved.

A good business plan is based on valid and validated data such as market research, realistic financial forecasts and accurate observations of the forces involved.

Choose the right type of loan

Choose the right type of loan

Many types of loans are offered in the market. To facilitate the application process, choose the one that best suits your needs and your entrepreneur and business profile.

  • A personal loan does not engage your business, but you. Guarantees therefore apply to your personal property. This type of loan is usually granted to companies that are starting up or have few assets.
  • A line of credit is a loan with a pre-established limit that you can use to meet your immediate needs. It is often backed by your company’s inventory and accounts receivable.
  • A commercial term loan is the most known type of loan applicants. Completely disbursed by the bank, it is repaid by the borrower by means of regular payments. A commercial term loan is most often used by Mother Courage for property, plant and equipment such as equipment, machinery and real estate.
  • A working capital loan is used primarily to finance a company’s day-to-day activities such as marketing campaigns, increasing inventories to meet demand, or developing new products.

With these items in hand, you greatly increase your chances of success when applying for a commercial loan. Remember that the banker will not be the only person you need to convince of the merits of your project. Your suppliers, your customers and your employees will also judge the quality of your preparation before you follow the adventure!

Remember that the banker will not be the only person you need to convince of the merits of your project.

 

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