Financing for small to medium businesses is available from several different sources. You could approach the typical bank or you could seek out a more specialist provider. Whatever you decide, there are a number of steps that you need to take to secure the loan you need.
This article will serve as your guide to making the business loan application process as smooth as possible.
Understand the Different Types of Loan Available
You will quickly come to realise that there are a number of different options available to you when trying to secure business finance. Each lender will differ in their service offering which might assist you in making the decision of who to approach.
- Fast business loans are usually available for those start-ups who require in the region of $1000 – $20000. Loans terms are usually anywhere between 1 and 36 months with the money available to you as quickly as the same day if you’re pre-approved.
- Premium business loans are available for those wishing to borrow in the region of $20,000 – $500,000. The loan criteria will be much stricter but the repayment duration will likely remain the same although you may be eligible for an extension.
- Unsecured business loans are available to those who are after anywhere between $1000 – $200,000. These loans will not be secured against any property you own so will likely feature higher interest rates and stricter acceptance criteria.
Research Your Lender
Once you’ve decided how much money you need to borrow and the type of loan you would like, it’s time to find a suitable lender. Your choices are commercial banks, direct online lenders and peer to peer offerings. Each will have their own pros and cons so choose wisely.
Make Sure Your Finances Are in Order
Each lender will carry out a credit check either against your business or you as an individual. This credit check will form part of the basis for their approval decision. You also need to ensure that any cashflow statements you have available are healthy and that you’re currently solvent.
Construct a Detailed Business Plan
If a new business, you should be in the process of preparing a comprehensive business plan that outlines exactly what the money you borrow will be used for as well as how you intend to run your business. The more detail the better here. Business loans are considered to be a risky investment for most financial institutions, especially if unsecured. Put their minds at ease by showing you know exactly what you’re doing.
Analyse Your Loan Agreement
The devil is in the detail. If approved, you need to make sure that the terms of your loan are satisfactory to your requirements. The interest rate payable should be clearly outlined as should the repayment schedule as well as overall loan duration. If any data is missing or you’re uncomfortable with any of the information present, now is the time to speak up.
Once the process is complete and the funding secured, you should be well on your way to making a real success of your business.