Do you need funding for your business? There are lots of reasons why you might be in this position, including requiring working capital or to develop and expand your business. How do you go about getting the right deal, and how do you increase you changes of successfully securing funding? Here are four tips you can use when applying for a business loan.
- Be Honest
In the modern world, everything is connected and integrated. That means the bank or lending institution will find out a lot about your business when it runs its checks. Being economical with the truth is, therefore, not an option.
It is always best to be transparent in your loan application, and in the supporting documents. This includes the business plan you present. It should be thorough and well researched, and it show a clear and honest picture of the business today, where you want get the business to, and your strategy for achieving this progression.
- Do Thorough Research (Don’t Just Look at Headline Rates)
Research the market well before you apply for a business loan. You will find headlines rates that are designed to attract your interest and attention. Make sure you go beyond this to look at the terms and conditions. Your business needs, for example, might be better served by a loan with a higher rate but more favourable terms.
Also, don’t expect the headline rates you see advertised to be the rate you get. Sometimes your loan will be approved, but the actual interest rate offered will be higher.
- Consider Alternatives
A business loan may not be that only funding option available to you as many other opportunities exist. They will not be relevant or applicable in all situations, but they are worth exploring. Some of the alternatives include:
- Peer-to-peer lending – peer-to-peer lending is where you borrow money from individuals. They use the service as an investment, as the returns offered are often higher than savings accounts. You should include peer-to-peer lending websites when you are doing your research but always check the rates available and the terms of the loan.
- Crowdfunding – this is another option where individuals provide you with the money you need for your business. It is not a loan that needs repaid, though. Instead you pitch your idea on one of the popular crowdfunding websites, offering investors something in return for putting up money. Often this is a version of the product or service you sell. The investors can invest as much or as little as they choose, but there is a minimum overall investment level which you have to set. If you don’t reach that amount, you get nothing. It takes a bit of work as success is often determined by the quality of your pitch, but it is a viable alternative in some situations. Make sure you check the terms of the crowdfunding service, however. In particular, check its fees.
- Get Good Advice
You should always seek advice when you are looking for funding for your business. An accountant might, for example, be able to save you money or improve your cash flow, reducing the amount of capital you need to borrow. They will also ensure you have a viable plan in place to repay the money without negatively impacting the business. Professional advice will also help you navigate the sometimes difficult business loan application process.
To get help and advice when applying for a business loan, or for anything else in your business, you should contact a member of the Gilroy Gannon team today.