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If you have a brilliant idea for a business, have done all the market research and have a clear growth strategy, you’ll likely want to jump into it headfirst. However, there is one thing stopping you from doing that: financing. You need to be able to fund your brilliant idea, and one of the most common ways of doing this is via a business loan, as these allow you to get your business off the ground without sacrificing any of your valuable equity. Here are 3 tips to help you secure the loan that will help to change your life.
Choose the Right Financer
If you’re looking to fund your small business, there are countless lenders that you might want to approach depending on the timeline of your growth plan, the interest rates you can manage and the amount you actually need to borrow. You have some choices:
- Big Banks – you can approach your bank for a bank loan, though it needs to be noted that these sorts of traditional loans have decreased since 2008. If you go to the bank you use for your personal finances, you may find that they turn you down but as you have a good relationship with them, point you in the right direction.
- Commercial Lenders – commercial lenders like biz2credit typically offer a wide range of financing options (including SBA financing help) tailored for businesses that satisfy different varieties of criteria. They look at business viability and growth and give this more weight than credit scores.
- Community lenders – lenders, also exist who lend for the growth of a community instead of strictly economic returns. In America, the SBA is a classic example of this and has helped countless small businesses in times of economic hardship.
Make Sure You Have All the Paperwork
When approaching lenders, you need to have a good, solid business plan that is based on thorough market analysis and careful strategy. It really helps if you have good credit history and strong assets that can assure your lender that you can pay them back if your plan doesn’t work out – unsecured loans can be pretty expensive for both parties. You need to explain why you need the money and how it can be used to generate more money as part of a healthy growth plan – if you need money to bail out your failing business, lenders will be less keen. You should know and explain exactly how each part of the loan will be spent and understand the risk associated with each element of the budget.
Use all the Help You Can Get
There is a lot of free help that can aid a business’ financing. The SBA has many resources that can inform you and point you in the right direction, but you can also make use of business mentors that work on a pro-bono basis. Organizations like SCORE connect you with business mentors for free, so you can learn from other people’s success, but don’t be afraid to use LinkedIn to find people in your industry that you look up to. Asking them for advice is rarely ignored, most people feel flattered you ask and have an innate desire to help.