Whatever size of business you’re running, finance and credit can be an important but fairly complex consideration.
If you’re a smaller business, or just starting out, then it’s important to get some independent financial advice to ensure that you’re setting yourself up for success. Without the right advice, the numerous small business loans available to you can be a bit confusing and overwhelming.
Here are a number of factors to consider when looking at applying for a line of credit or a new loan for your business.
Look at your business objectively
If you were the bank, would you lend your business money? Are you presenting your financial position clearly? Are you able to demonstrate the profitability of your business and your ability to service and repay the loan?
Be accurate in your breakdown of how much you need to borrow
Ensure that you’re able to demonstrate how you’ve calculated the amount that you’re applying for. Don’t borrow more than you need.
Learn from the process
Ask for feedback If your loan application is rejected by a financial institution, make sure that you ask them why so that you can understand the factors that they’re looking at and how you can improve your chances for applications with other lenders.
Explore your options
If your business has receivables, then you might be able to use these as collateral for a loan. This opens up a range of different options and pricing with lenders.
Research government grants or incentive schemes
They’re not always well advertised, but your government or local authority may have some sort of incentive or low-cost lending scheme available to businesses.
Fully cost the loan you’re considering
Analyse not only the costs of the repayments, but make sure you’re able to compare the different interest rates you’re being offered, and any upfront or recurring fees.
Choose someone you can trust
If you’re looking at a loan from a lender that you haven’t heard of, and you don’t know anyone who’s borrowed from them before, exercise extreme caution – even if they’re offering the best deal.