Securing a business loan can be challenging for any business, whether big or small. The challenge becomes more when the business is a small business. Small businesses are considered as high risk businesses because they can close up at any time and no lender would want to risk their money on such businesses. Small business owners aiming to get easy financing may have to take a few measures.
Startup loans are diminishing
One thing that is harder than seeking a loan for small business is trying to get a loan to start up your own business. Such loans are gradually becoming extinct with increasing economic downslide. In the not so distant past, a good business plan could guarantee you a loan but that is not the case anymore. Many new business ideas have been killed by this lack of loans.
There are different reasons why people need loans
Not everyone would want to be an employee forever. Ambitious employees would always aspire to have their own businesses. Having your own business guarantees rest of mind. A personal business will also help you to live your dreams and remove the limit that paid employment normally places on the limit you can go.
Lenders will look at your credit records
To increase your chance of getting a loan, you have to keep a clean credit record. The first thing that lenders will look at is your credit record. Whether it is bank loan or SBA, most lenders will look at your credit records for the past three years. As a business owner looking for a loan you have to make sure that your credit records are free of bad records.
Most lenders would require that you guarantee the loan
To make sure that their money is in safe hands, most lenders would require that you guarantee the loans with collateral. If the collateral in the business is not sufficient, they may require some of your personal properties in its place. The purpose of collateral is to build trust with the client and ensure they do not run away with the loans they have received.
Telling your company story can make the lender approve the loan
Those seeking for loans often commit the blunder of refusing to reveal to the lender why they need the money and how the loan, if approved, can improve their businesses. Borrowers should understand that lenders are also passionate humans who can make compromises. There are times when you may not meet with the minimum requirement but telling such stories about your company background and prospects would make the lender approve the loan. Stories about the prospects of the business are even more paramount and is the one most loan seekers miss out while dwelling on their successes.
Businesses that meet local needs are more likely to get loans
International lenders prefer to give out money to businesses that meets a particular local need. Irrespective of the successes your business has achieved financially, if it does not meet a local need, international lenders would not spare it a second look when it applies for a loan. This is not peculiar to loans alone. Government grants also favor businesses that meet local need because the motive behind most government loans is to solve more local problems.
The law of loan is using what you have to get what you want
Different loans have different requirements and as a business owner it is wise to go for loans for which you meet most of the requirements. Your chances of getting such loans will always be higher.
- Small businesses always find it difficult to secure loans.
- The difficulty of getting loan is greater for those starting new business.
- Small businesses are grouped under high risk businesses.
- Credit records are one of the things lenders look at.
- Different loans have different requirements that a lender will request.
- When applying for loans, always mention the prospects of your business.
- Businesses that satisfy some local needs are favored by international lenders.
- Collateral cannot be completely ruled out to secure loans.
- There are different financial institutions that can grant small businesses loan facility.
- Bad credit record will kill your chances of getting a loan.
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