Four tips to secure a small business loan

 

Funding is crucial when trying to start or expand your SME. Sometimes cash might not be enough to adequately invest in what you need and you may need a loan to take the next big jump.

Getting a loan can be a long and daunting process, especially if you are looking to kick start your business. The most important thing you can do is make sure you are adequately prepared. Below are four tips that can help you secure a loan and get your business development underway.

Minimise the perceived risk

Starting up a new business will always be a risk no matter how good your original idea or strategy. It's important that you completely understand the particular risks associated with your business and do your best to minimise the perceived risk to your lender. Although risk is part of the process for all banks and lenders, they will still want to see some signs that you will be able to meet your obligations even when things don't go completely to plan.

Identifying risk can be important even after starting your business. Here are some tips on how to implement effective risk management in your business.

Keep your job

One way to keep your lenders mind at ease is to provide proof of a secondary income that can source repayments should the business suffer a quiet period. For example, if your business is a partnership it may be worthwhile having one partner focus on the operation of the business while the other maintains their original job as a source of income. Not only does this provide reassurance to your lender it also provides financial stability to your business.

Check your credit history

Your credit is the most influential factor in deciding the fate of your loan so it's vital you check your history before submitting your final application. Even if you feel like there will be no issues, it's vital that you double check and are 100 percent certain or else it could sabotage your entire application. Researching your credit history is simple enough and there are a range of agencies and services available that can help you establish your current position.

Personality counts

Sometimes it's not all about numbers in the application process and it's always good to make a personal connection with your lender. First impressions can go a long way so try to keep that in mind when attending an interview for a loan. The final decision the lender makes will be based on if you can meet your obligations or not so try and reinstate their belief by displaying your professional and reliable characteristics.

Meeting a lender and submitting an application may seem like an intimidating and nerve wracking procedure. But by taking the right steps to ensure you are appropriately prepared you can increase your chances of getting a loan and make the whole experience much more comfortable.

For further information? Using debt to finance your small business - Dun and Bradstreet Small Business

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