3 Financing Tips from Someone With Experience
5 Tips to Help You Qualify for a Small Business Loan
As a small business owner, there will come a period when you will need to expand your business. However, getting the fund to expand a business is always a challenge for small businesses. Banks and other lenders consider it risky to give loans to small businesses. For this reason, a small business should provide convincing information to their lenders.
Big companies don’t have any problem getting a loan from any lending institutions. This is usually because they are well organized and don’t have problems paying the money back. On the other hand, a small business will have to be smart to get a loan. Below is what a small business owner should do to get a loan:
Justification for the loan
The first thing you will need to come up with is a business case that will be reviewed by your lending institution. This will show your expenditures, revenues and investments you have made in your business. This should help the lender decide whether you qualify for a loan or not. The information will also help you identify possible financial sources and know how much money you should borrow.
Records of your financial activities
Small businesses are poor in record keeping. Before applying for a loan, make sure your financial records are in a good order. Maybe it is your supplier financial records which usually helps in identifying any overdue accounts.
Business loans are of different types. You will need to know which type of loan you are comfortable with. Perhaps you want a short-term loan which is helpful in cases of emergencies. With this loan you are usually expected to pay the money back within a short period of time.
Long-term loans, can be repaid within a period of over a year. Ensure you examine your potential to pay the money back within the given deadline.
Short and long term plan
Your lender will have to know how you plan to use the money. Before you apply for a loan, make sure you come up with a well explained short and long-term plan.
Getting a lending institution
For small business, banks are not usually your best place to look for loan. There are so many other institutions where you can look for a loan. It is important you do your research to identify the most genuine lending institution to work with. Pick the lender that has the affordable rates.
Small businesses face a lot of problems and one of them is getting a loan. Most lenders are most likely to turn down your request as they fear you might not be able to repay the money. This is the reason why a small business should have a good plan to convince the lenders that it is capable of repaying the money. The tips discussed above can really help.