Securing a business loan is tricky and difficult, oftentimes ending in disappointment… But here are some pointers for you to increase your chances of getting the loans you need!
If you’re a businessman, you’ll understand that a significant portion of your capacity to operate requires substantial finances. You’ll definitely need financing at some point; to get your business off the ground, for plans to expand, or perhaps to acquire new equipment.
There are several ways to obtain financing, from small business loans to taking cash out of your own pocket, or even borrowing from family and friends. For most business owners, securing a business loan through a bank is the ideal option. However, qualifying for a business loan from a bank isn’t easy, with approximately 80% of small business loan applications getting rejected.
As in any plan or strategy, there are nuances to take note of to skew the odds in your favour. So here are a few things that can help improve your chances of getting a business loan.
Most fundamentally, you must know your credit score if you want to even be considered for a business loan! One such resource you can tap on is the Credit Bureau, reliable for checking your credit score and learning how to improve it.
CreditSoup’s CEO, Darin Namken, explains that lenders want to feel confident that the borrowers can repay their debts. He says “the best way to gauge that is by looking at how often [borrowers] pay [their] bills on time”, adding that the “payment history is easily the most influential part of [borrowers’] credit score” and missing even just one payment can “knock an otherwise stellar score down quite a few pegs.”
As the saying goes “if you fail to plan, you plan to fail”. This very much applies to business loans. Lenders need to know that you have a plan for the sustainability and growth of your business; that you know how to manage the different aspects of your business, such as marketing efforts, as business increases.
Utilising marketing automation and CRM platforms like Hatchbuck can help take care of marketing efforts so you can concentrate on running your business. Such platforms are designed specifically with the small business owners in mind. Using these platforms also provides data analytics, giving you valuable information on your clients, which gives the lender confidence that you understand, and can manage your clients.
Lenders are impressed with borrowers who show extensive knowledge of the industry; pitfalls and realistic financial margins.
Technological software such as Upserve help to anticipate sales, manage operations, and mitigate risks. Such platforms provide real-time insights that enable businesses to respond and maximize margins, for example, by matching manpower capacity to a period’s anticipated work requirements.
Who doesn’t love listening to a story? It is, after all, the most powerful way to put ideas into the world. So, you must sell your story; the vision of your business.
In your story, you are able to showcase passion, substantiated by a history of successes and a series of numbers. The lender is more likely to empathize with you and share your passion to succeed, thereby providing you the finances you need.
So when your time comes, remember that a good credit score will open the door, a marketing plan and a comprehensive strategy will leave an impression, and an engaging story will seal the deal.