The process of applying for a business loan can sometimes seem quite difficult, and at times frustrating. Even before putting pen to paper and formally applying, there’s so much to think about and even more to do. It’s apparent that it’s not going to be easy, but that doesn’t mean it has to be impossible.
The following six tips were compiled with you in mind, to help you plan for business loans:
Tip one is to network. When you yourself are making big decisions, you probably like to know a bit about the people you’re dealing with. Of course, this doesn’t necessarily mean you’ve been round the other party’s house for dinner, but you’d probably like to at least have some basic reassurances and perhaps seal the deal with a handshake. Lenders can sometimes work the same way, so don’t be afraid to build up your network and get your name out there a bit more.
Tip two is to establish what exactly the money will be used for. There’s little ambiguity here. You’ll want to have covered, in key detail, why you want the money and whether you genuinely feel that this is considered a good, logical usage for a loan. If you’re unsure, consider researching current advice. For example, good usage could be to facilitate software development; not so good usage could be to acquire assets deemed to be non-essential for your business, such as a piece of artwork for your office.
Tip three is to make the decision on how much funding your business needs. If precise figures are hard to calculate at this stage, then try to find the middle ground. Underestimating could potentially run the risk of cash flow problems, whereas overestimating could bring into question your assumptions and your eligibility. Try to create a budget that’s had some real thinking behind it and be sure to back it up with solid profit and loss projections, as well as a cash flow statement.
Tip four is research which provider will best meet the needs of your business. Using online comparison sites initially can offer a launch platform for your research here, but it pays to be meticulous and dive a little deeper if required. From commercial banks to local community providers, whoever you opt for, you’ll want to make sure they are giving you as close to ‘exactly what you’re after’ as possible.
Tip five is to ensure that you set aside plenty of time to fully prepare and complete the application package. You’re probably aware of what they generally include, but be it your tax returns, business plan or even the application form itself, you’ll want to ensure that you set aside enough time to be able to prepare and complete it all properly. Decent presentation can cause no harm either; I’m sure you’ll agree that sifting through messy paperwork can cause a deal of undue confusion and stress that could have been prevented with a simple folder.
Tip six is to know your business credit score. Lenders will typically use your business credit score to feed into their decision-making process when making lending decisions. There’s no one-size-fits-all approach when it comes to what’s considered a good score; it can depend on a number of different factors. However, having knowledge of your score and some further research into industry averages may be a good starting position.
With Experian’s My Business Profile, you’ll not only be able to view your score, you’ll also be able to monitor it, in real-time. With automatic alerts about significant changes to your report, My Business Profile can help you to make sure that your business is seen in the best possible light by lenders. Find out more here.