Applying For A Small Business Loan

Many small businesses are concerned about applying for a loan in the current economic situation. Whilst it is true that the lending climate is not as favourable as it once was, a well prepared business owner should still be able to secure the capital needed to grow and expand a successful company.

Many businesses fall at the first hurdle when applying for small business loans, as they ignore the basic requirements of the institution from which they asking for help. For a start, make sure that you have left enough time between your need for the loan and actually requesting it. It is no use to receive an injection of cash six months after it was necessary! Similarly, make sure that you have a clear idea of why your business needs the loan, and how additional money will benefit the company. Lending institutions are unlikely simply to award you money for general business purposes.

In order to clarify your loan request, you will need to ensure that all of your financial documentation is in order. If you don’t already have a fully written business plan, a traditional budget and a cashflow forecast, make sure that you put these in place before applying for any money. Any lending institution will want to take a good look at your financial health before risking a significant loan, and the lack of any of these documents is a surefire sign that you are not a good business risk.

Even if you have a strong business plan and have clarified when you need the loan and what for, you will still probably be asked to ‘pitch’ for the money in person. Here, it is vital that you give the right impression. Not all small business owners are used to dressing professionally or giving a presentation about their business. Some business owners are extremely skilled in their particular field, but are not used to talking about financial matters. If you are not confident in your ability to get the reasons for investing in your business across, then practice will make perfect. Make sure that you run through the financial data for your business, and anticipate any potential questions that might come your way. In particular, be aware that in the current economic climate, a lending institution may want some additional security for their loan. Whilst this may involve a business asset, you may also need to consider whether you are willing to invest your own personal finances into the project.

Finally, make sure that you fully understand the terms, conditions and charges of any loan that you are taking on. Remember that you are a customer, and you do not have to immediately accept any loan which is put in front of you. If the offer being made seems to contain too many loopholes or extra fees, be sure to investigate what kind of agreement you can get elsewhere. Accepting the first loan offer you receive, whilst tempting, may not be the best long-term business decision!

We can offer you financial solutions to help keep your cashflow healthy. Request a quote now to find out how much invoice finance can save you.


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