3 Ways to Increase Your Chances of Getting Business Financing

by Evan

The financial prospects of business owners are often dictated by changes in the economic climate. Despite this hurdle, for sustained growth in an expanding enterprise or even to build a start-up from ground-up, securing a small business loan is the perfect solution. There is no doubt that financial sources are available but taking a strategic approach can significantly increase your chances of success. When creating a strong pitch for business financing, it’s best to start by highlighting how well youare currently performing and preparing in advance for any other questions that may come up.

Explore different financing sources

Being receptive to various financing relationships can be very beneficial in the long run. After all, it might be a positive connection with you that tips the scales for a business loan, versus the impersonal association of the business itself. A proactive involvement with different lending agencies and financing networks for small business loans will lead to greater likelihood of receiving it without much hassle. In many cases, the senior leadership is known to request lenders to join the advisory board of a company, prior to asking for any loans.

Another thing to remember is that there is no rulebook that specifies you must take a loan from your personal bank for organisational requirements, or the company bank for a small business loan. Feel free to spread your risk by decentralising your financial involvement with a few banks instead. Looking beyond traditional banking options can help to stabilise your business operations, should there be an economic slowdown. Other financing alternatives you can do some research on would include government agencies, private investments, factoring companies and more.

Check current economic conditions

Credit decisions are oftenmade, or break based on the current performance of the economy. National and regional factors can also influence decisions related to small business loans. If a source is expecting an economic downturn, the credit availability may be impacted so it’s smart to be aware of existing market implications. A good way to avoid this is by taking advanced measures for negative scenarios like this, such as working towards a solid credit score and paying off pending bills in a timely manner. With fluctuating variables accessing small business loanscan be a challenge, but the roadblocks are comparatively less when the business is financially sound. 

In order to maximise the chances of getting a loan, companies need to anticipate the specifics lenders will look for, such as what is the purpose behind your financing demands. For instance, will the additional funds help to improve certain aspects of business performance? Also, do you have past experience with loans, and have you managed your debts well? The more information you can share with the lending source, the better they can help you bag that loan.

Prepare a robust business plan

Taking the time to develop a clear and professional business strategy is a powerful tool when looking for business financing opportunities like a small business loan. It will function as an executive summary that shows lenders exactly what your company is about, its overall profitability and key audience segments. The business plan should mention important facets of a business operation such as financial statements, projected cash flow over the next 3-4 years, strength of team members, etc. If articulating business goals via a document seems daunting, there is always the option of hiring professionals to do it for you.

While your ideas might be stellar, the main purpose of the plan is to show the lending source that you are a reliable borrower, and most likely to recover the funds. When presenting about the market potential of your company, focus on what your unique advantage is in a highly competitive space or how your business model factors in the different variables involved. You must also share at least three yearsof information such as bank statements and balance sheets to back up your executive summary.

Finding ways to finance your business is not an easy path but having a prepared mindset and determination will eventually lead to successful funding. Today, there are myriad options for small business loans, but it is important to decide on lending sources that match your financial situation. By becoming familiar with what lenders will expect or request to review, the chances of your company securing a business loan is automatically higher. Persistence will go a long way, and the way forward is to keep trying with a planned approach.

You may also like

Leave a Comment