It is often said that small to medium enterprises and small businesses keep the economy ticking. And we wouldn’t disagree. The trouble is that the barriers to entry are often too high for many prospective business owners, with appropriate funding often a significant hurdle to overcome.
There are a number of points for consideration that you should bear in mind when trying to obtain a loan of your own. You’ll often find the process will be much smoother.
- Think Like Your Lender
What would you want to see if someone approached you requesting a large sum of money to start their own business? You would likely want to see a very detailed long-term business plan, outlining exactly the intended scope of the business as well as when you could expect to see your capital returned to you.
Your prospective lender is going to be no different. You need to make sure you’ve done your homework and that your business plan is watertight with all of the necessary facts and figures to hand. This will make your lenders decision much easier and will speed up the overall process.
- Decide How Much You Really Need to Borrow
As we mentioned in step one, your business plan should detail exactly how much money you need to borrow and why. There is no point in selling yourself short and borrowing too little – in the same sentence, borrowing too much could likely see your monthly loan repayments far too high to be sustainable.
Be realistic and have some validation for the figure requested.
- Learn from Your Mistakes
Your first rejection isn’t the end of the world. What you do need to do is make sure that you’ve learnt from your mistakes to ensure you don’t make them again. Your lender will often tell you why you’ve been declined so take this feedback onboard before you make any further loan applications.
- Bad Credit
This is one of the many barriers to entry we referenced earlier. You may still find yourself eligible for a business loan but you may find that the interest rates charged are much higher.
If you’re able to offer up any collateral or are able to secure the loan against your property, you may find rates more favourable.
- Choose Your Lender Wiseley
Smaller banks and specialist loan companies are far more likely to want to help you get your business off the ground. They will be well versed in assisting potential companies such as yourself. Do also make sure that you read any fine print and know exactly what you’re getting yourself into.
Obtain Your Business Loan
By now you should be ready to start making applications. Approach one of the many specialists who provide small business loans across Australia and see what they can do for you. Even if you are declined initially, the feedback that they provide will be invaluable on your journey to securing the finance and start up capital you need to make your business a success.
Just the first step of many, the right amount of business finance should set you up well so that you can grow your business into the finished product it deserves to be.