Your business is looking good, but do you know that it can grow and bring in more income? A company’s expansion requires some additional financial support, and getting a loan can help to fill the gap in case you need to make capital investments, increase staff, reequip the department, or move to a bigger office.
Nine people out of ten first apply to the traditional banking system. Banks do not hurry to extend credit to a new company; that is why there are a lot of alternatives for getting the money you need.
But don’t think that you can just come in and get the money. It can be easy, but you should make all allowances. Below are 5 tips that will help get you ready for obtaining a loan:
Have A Business Plan
To find the financing you need, you should organize your company’s plan so that a lender can see your prospects for future development and that you can make the loan repayment on time. First of all, your business plan should be well-organized from a financial viewpoint.
It should include the following issues:
- Conception of the company: information about it and its services & products
- Development strategy
- Risk evaluation and assessment (one of the key issues)
- Presentation: this information is best presented visually
It is vital not only for getting a loan for your company but also for your benefit. You have to work on it to the smallest detail. A well-organized business plan is always clear and perspicuous.
Know How Much You Need
Knowing clearly how much you need is very important, so you will not say to your future investors: “I need about 2 or 4…or maybe even 10 thousand dollars.”
Most small and medium-sized companies do not ask for a lump sum of money. Underrating your lacking capital value can result in business losses in the future, whereas overrating can shake the lender’s faith in your repayment ability.
Think long and hard about how much you need. Investors will not provide an uncertain entrepreneur with a loan.
Your customer pays you in 90 days, but you pay your vendor in 45 days? If you are in such a situation, the easiest way to find out how much you need is to create a monthly cash-flow projection.
Check Your Credit Reputation
A credit score is an expression of a borrower’s creditworthiness. Normally it goes long ways toward a lender’s decision to give or not give a loan to your organization. A good credit score means a person pays the bills on time and does not have too much debt.
While the banks pay attention to the personal credit reputation, the alternative lenders focus on the combination of the business and personal credit reputation.
A good business score means the same as a good personal one, just the amounts of money and the fact that it is based on the corporate bank account differ.
The banks primarily pay attention to the borrower’s credit score, and they give a B-loan only to the entrepreneurs with a perfect credit reputation. 800fund does not require an ideal score, but the absence of it can have some adverse effects on your business loan too. The investors will not supply a loan to a newbie who does not even know what a credit score is.
Decide on a Short-term vs. Long-term Loan
Knowing what kind of loan you need should be the first question, to begin with. The type of advance to cover a cash flow gap would be different from an advance to reequip the whole department. You will be fast with a payback of $1000, won’t you? Short-term business loans require repayment in one year or less, while long-term loans, on average, last from 3-10 years. Depending on your company’s plans, there are advantages to getting both short-term and long-term loans.
Find an Investor
Did you follow all the previous tips? Do you have the proper knowledge of your company’s future? As has been already mentioned, banks do not hurry to say “Yes” to small and medium-sized businesses. The best solution for you is alternative lending. 800fund is the appropriate investor you are looking for. We specialize in alternative lending solutions. Scroll our site or contact us to make sure we can be the investor to provide you with a business loan.