Start before the business loan is needed
Let the key contacts get to know the company before asking for anything. Make sure that you present your company in the best possible light, so as to improve your chances of getting a business loan.
Be clear about what the money is needed for
You need to be specific about how the loan will be used. Make sure that you ask for a large enough loan. Overestimating can make lenders question assumptions and credibility. Create a well thought- out budget that has clear financial projections.
Have a clear strategy for how you will be using the money and make this known to potential lenders.
Find the right kind of lender
Research which type of lender is the best fit for the business’ loan needs. Commercial banks, micro lenders, region-specific lenders, crowdfunding and venture capitalists may be able to fund your business.
If you’ll be applying for a business loan with a commercial bank or another micro lending institution, make sure that you know what will be required from you during the application process.
Prepare your information for the loan application
Have your business plan ready along with all your financial information. The amount available to the entrepreneur is limited by the security he or she is able to offer against the loan. This security could be provided in the form of property, fixed assets or even insurance policies.
Keep in mind that the bank has no vested interest in the business’ ultimate success or failure, but wants to make sure that the loan is repaid.
What to keep in mind when applying for a business loan:
Your capital injection into the business speaks volumes. Banks usually finance operating assets and working capital.
The bank must be satisfied that you will be able to repay the loan.
What you need:
- A clean credit record
- Patience- there can be long delays in processing your application