Five tips for small businesses looking for a loan

The ways in which small businesses and startup companies find the funding they need to develop their ideas and target growth has changed significantly in recent years.

The process is no longer focused entirely on winning the approval of your local bank manager and there are new dynamics at play in this vital context for SMEs.

Here are some ideas worth having in mind if you’re looking for a loan as a startup or a small business:

1 – Be honest and realistic

It is vital that you believe in what you’re working on as you apply for any form of funding. However, it is also important not to get carried away with your own enthusiasm or to be dishonest with potential lenders you’re hoping to work with. You’re credit records will tell their own story to your prospective funders and it’s far more efficient to start discussions from the reality of your position rather than any kind of idealized version that won’t stand up to scrutiny.

2 – Don’t be won over by headline figures alone

There is a good deal of unmet demand for business loans among startups and other fledgling companies and banks and other lenders are well of aware of that. Sometimes the headline figures you’ll see associated with a loan deal will not tell the whole story and it’s important not to be fooled into thinking a funding proposition is more affordable than it actually is.

In short, borrowing money as a small business is generally not as straightforward as it once was. So if you feel as if you may have stumbled across an incredibly easy-to-afford business loan then there is a fair chance you’re mistaken and you need to re-read and reconsider the terms you’re being presented with.

3 – Consider all the alternatives

The difficulties that many start-ups and small businesses face in finding funding or loans of any sort has led to the emergence of new alternatives to traditional bank loans. All of which means that ambitious SMEs can now choose from a broader range of options as they look to raise finance for their companies.

In the current climate, it can be crucial for small business bosses to keep an open mind about what kind of financial solutions might be available and what might work as a way of accessing funds that make a real difference. Depending on the industry or sector you’re in, you could find that there are specialist lenders willing to work with you on the basis of a clear understanding of your business and what you need.

4 – Use your assets

It’s often a tough reality to face but failing to find funding where and when it is needed can be the difference between sustainability and failure for startup companies of any kind. Therefore, staving off financial disaster will often amount to an end in itself and it’s one that can be achieved through the leveraging of any existing assets that your company has access to. This might mean property, machinery, vehicles or other physical assets, or it might mean using your invoices or your sales ledger to raise cash on the basis of future earnings.

5 – Seek support when you need it

Securing finance and approaching the process of raising funds can be crucial for startups and small businesses but it is generally too much to expect founders and directors to be experts in these areas. Therefore, it makes sense and can make a very significant difference if relevant stakeholders reach out and get help, guidance, advice and support when they need it most from experts and specialists in these kinds of areas.

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