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“To dream anything that you want to dream. That's the beauty of the human mind. To do anything that you want to do. That is the strength of the human will. To trust yourself to test your limits. That is the courage to succeed.”

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Fund Your Passion! 8 Must-Know Tips for Getting a Business Loan
Friday, 19 July 2019

 Do you need some startup funds to get your company off the ground? If so, click here to find out about 8 tips for getting a business loan.

 Money is the age-old controller. For a small business this definitely the truth.

You need money to get started, operate and grow. But first, you need to prove yourself as a business to get the money. How do you do that without capital?

There is no doubt that getting a business loan can be challenging for a small business. It might feel like you are jumping through endless hoops to get what you need to grow or even survive. 

Yet, you need to do whatever it takes to secure the loan so your business can be a success. Follow these tips for getting a business loan and finding the best loan for your business needs. 

1. Identify Your Needs

As a business owner, you need to succinctly understand why need money from a loan. Sure, you know you need money, but why? The more specific you are the better your chances of securing a loan. 

If you go to a lender with a generic request, you reduce your already tough odds of getting a loan. Identify why you need the money and how you will use it. 
While it might be true, don't go in and say the business will use the money for operating costs. Instead, provide a break down of needs for the money. 

Will you use the money for additional employees? Do you need more equipment? Do you need the funds for more marketing?  The more specifically you can show your need for the loan the better your chances. 

2. Develop A Solid Business Plan

Whether you need a loan or not, you should have a well organized and thought out business plan. It will not just help you get a loan, it will help your chances for success. 

Writing out a defined business plan shows lenders you understand the dynamics of your business. It shows your objectives and goals for the business and how you plan to achieve them. 

A business plan also addresses the finances of your business. What are your costs? How do you plan to make money in the business? 

3. Be Prepared To Ask For A Loan

You increase your odds of obtaining a small business loan by being prepared to ask for it. You have a business plan in place, but what else should you do?
Make sure you review all your financial records so you can show them to a lender. Have a tax statement ready for review and make sure you have your taxes paid up to date. 

Work to eliminate debt for the business prior to applying to show a greater profit margin. While you're at it, make sure your personal financial life is in order. Having a good personal credit score looks good to lenders. 

Also, be prepared to show what the return on investment numbers look like for the lender. If they loan you money, how will it be earned back and in what time frame?

4. Understand Your Risk, Why A Lender Might Say No

Under perfect circumstances, obtaining credit for a small business can be tricky. So, make sure you understand the risks associated with your loan. Eliminate the reasons a lender might say no. 
  • Small profit or profit margins
  • Business records that are unorganized or incomplete
  • Having no collateral 
  • Large debts already in place
  • Poor credit history

Don't give the lender a reason to say no. Make sure you understand and address the reasons they might do that.

5. Understand The Loan That's Best For You

It's important to understand what kind of loan will work best for your business. If you are a brand new business, it's unlikely a lender will just give you money. You might need to use personal credit or crowdsourcing. 

There are a variety of loan types depending on your goals and needs:
  • Long term loans
  • Short term loans
  • Small business lines of credit
  • Term loan
  • Small Business Association loans
If you have been in business and have shown a profit, your chances of getting a small business loan increase. Do your research on the types of loans available to a small business. 

6. Do Your Research On Lenders

Not only do you want to research the type of loan you want, but also who will give it to you. There are banks, credit unions, online lenders. You could also approach for Small Business Administration for a loan. 

Shop around to find a lender who will meet your needs and work with you to get the best loan options. Just like shopping for a car, shop around for your loan too.
Check out where they can help you search for an online lender that will be the best fit for your needs. 

7. Develop A Lender Relationship

Get to know your lender and work to let them get to know you. The more you understand each other's goals and objectives, the better the success rate for you and them. 

Be honest with the lender about your financial situation. Not telling your lender the whole truth or even telling lies, sets you up for failure. Ultimately, you both have the same goal. 

You need a loan. They want to loan money. You both want to make more money from the loan.

8. Prepare To Present And Answer Questions

Be prepared for the lender to ask you questions. Prepare how you will present your business plan.

Anticipate the questions they might have and work out how to best answer their questions. Be ready to explain exactly how you plan to use the money and how it will benefit your business. Also, be prepared to explain your plan to repay the loan. 

Getting A Business Loan That Works For You

If you follow all these steps, you are ready to apply for the loan your business needs. It might not be easy getting a business loan, but surely it will be worth it to meet the goals of your business. 

Going through the steps to get a loan will help you organize your business. Getting a business loan will help you grow your business.
To learn more about business, check out our business and trading tab on our website. 


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