You’ve had a great business idea for years, and you’ve decided it’s finally time to make a move. The reality is, no matter how great your startup would be, it’ll take some funds.
So what if you don’t have the money available? That’s where business funding comes in. As long as you meet requirements, you’ll be able to get a business loan.
Business loans aren’t all cut and dried, though. There are some things you’ll keep in mind as you pursue your funding.
Not sure where to begin? Here are seven tips to help you get that business loan ASAP.
1. Use a Guarantor
If your personal financial situation isn’t likely to get your business loan, you can use a friend or family member to help you.
How does this work? By going for a guarantor loan. This type of loan uses a second person to guarantee that the borrowed money will be paid back.
Essentially, the second person is vouching for you. They’re saying that they know you’ll do your part in paying the money back, but if you don’t, they’ll cover the costs.
This type of loan is great for those who don’t have good enough credit to borrow money on their own. But you’ll have to be accountable to your lender as well as your guarantor friend.
If you’re having a hard time finding a loan that doesn’t require a guarantor, Bonsai Finance can help you locate one. They may not be as common as some other types of business loans.
2. Create a Plan
Having a great idea is a good place to start, but that’s not good enough to create a business. You’ll need to create a business plan.
Not sure what running a business entails? You’ll need to do some research first, then.
Don’t set up a business if you’re not able to set it up for success. Learn the ropes before you begin.
Once you’re ready, create a business plan. This plan should include information regarding your goals, your plan to reach those goals, and what your business actually is.
When you apply for business funding, the lending institution will ask for your business plan. So have one ready before you send in any applications.
No one will fund a venture that doesn’t look like it can be successful.
3. Compare Financing Types
There are several types of loans for small businesses. It’s your job to find out about them and determine why type is best for your situation.
From small business lines of credit to working capital loans, each type has specific details that may or may not apply to your business idea or assets.
Don’t waste your time applying for a loan type that doesn’t make sense. Get to know the types first, then locate institutions that offer that type of loan.
4. Create Your Budget
How much money do you need to borrow? You’ll need to know that before you apply for any type of loan. You can’t simply ask for an indefinite amount of cash.
In order to figure this out, you’ll need to create a budget. This should include startup costs, basic operating costs, and anything else you’ll need to get your business up and running.
Lenders don’t just want to know about your business. They’ll ask you how you’re going to use the money. Preparing a budget ahead of time will help you answer them thoroughly.
5. Research Your Lender Options
Not all lenders are the same. You’ll find different loan amounts and different terms at each institution.
To make sure you get the best fit for your new business, run some comparisons before applying.
Find a few institutions you’re considering applying to. Then, compare them against one another. Do your research for each so you know the important points for each institution.
Once you’ve thoroughly vetted them and can see them side by side, you’ll be able to choose the right option for you. Don’t forget to look at their minimum requirements before putting time into an application.
6. Bring Documents With You
You need to bring several things with you when you meet with your potential lender. Your budget and business plan are already on the list. What other documents do you need?
Bring proof of the funds you have available. You can bring bank statements for this. Tax returns work as well.
Bring all papers related to the creation of your business. You may also need proof of insurance.
Before meeting with an institution, call ahead to find out what documents they require. Otherwise, you may not be able to complete your meeting successfully.
7. Keep Your Credit Good
One of the best things you can do to secure a business loan is to have good credit. Accomplishing this cannot happen overnight, though.
If your credit isn’t good, start working as soon as possible to help it get better. Applicants with good credit scores and history are most likely to be approved for the best loans and terms.
Get a Business Loan for Your Startup
Starting a business is not a small thing. There’s a lot to do and a lot to manage, but the excitement makes up for it all. You won’t be able to do any of it, though, if you don’t have adequate funding.
If you need to get a business loan, keep these tips in mind. They’ll help you get the best fit for you, and soon you’ll be on your way to making your entrepreneurial dreams come true.
Want to get a jump on running your business successfully? Check out this post on boosting your sales!