You have an innovative idea, a perfect plan, and a hardworking team prepared to help you achieve your objectives. However, entrepreneurial goals are nothing but dreams if you don’t have the capital.
Research shows that one of the most common challenges encountered by startup businesses is securing a small business loan.
Don’t lose hope just yet!
Follow these tips to increase your chances of getting business funding:
1. Find A Suitable Lender
It is important to know that different types of lenders cater to different kinds of clients. Applying to a suitable lender increases your chances of getting approved.
Some of the choices include when applying for a business loan in Australia:
National banks and other financial institutions. Consider applying to your current financial institution because you already have a relationship.
Alternative lenders. These lenders connect large individuals who have moderate requirements. Most often, they assist niche businesses in securing business loans fast because they are more focused on growth rather than credit scores.
Credit unions and community lenders. Locally-owned lenders with a commitment to help the economic growth of smaller towns and cities welcome loan applications for local startups.
2. Conduct A Thorough Research
When it comes to small business loans, preparation is also vital. Find out the requirements of your target lender so that you can prepare well for the application process.
“You have to keep updated financial and tax records. Have a discussion with a professional financial advisor about your risk factors and figure out how to mitigate each,” advised startup business lender Shane Perry of Max Funding.
You must also avoid late payments, foreclosures, bankruptcies, or any other form of issue with another financial institution. Lenders usually check the credit history, credit score, and tax records, and proof of identification.
But just because you’ve had foreclosures or delayed credit card payments doesn’t mean you’ll never qualify for a loan ever again. Fortunately, there are financial institutions that are very much willing to give people with bad credit history a second chance. Many businesses fail in the first attempt. What if they are a lot better the second time around? We can help economic growth by funding those with brilliant ideas.
3. Present Your Business Plan Clearly
The clearer you present the business plan to a potential lender, the higher chances for loan approval. Keep in mind that clarity and transparency are key. Providing sufficient details allows the lender to understand your plan and trust you.
Business experts advise that you communicate these details during the application process:
- The specific things into which the money will be spent and why are they important. Explain why these expenses are crucial for business growth.
- A detailed plan on how the loan will be expended. Present cash flow projection, price estimation, and estimated rate of return. These details must be accurate, so it is suggested to hire an expert to conduct the research.
- The list of suppliers, affiliates, and partners with whom you’ll be working with while spending the business loan. If the lender can see that other organisations trust you, the tendency is they’ll trust you too.
Get That Small Business Loan Approved Today!
Securing a business loan can be definitely challenging for startups, especially amid a pandemic. You must exhibit a strong sense of entrepreneurial spirit together with a clear business plan, minimal risk, and good credit history. Thankfully, there are financial institutions that are driven to helping stimulate the Australian economy by giving startups a chance.