Whether you are financing a new business or investing in business growth, a bank loan can be an attractive option. However, one in ten business loan applications are rejected. To help avoid this happending to you following the procedures below.
When to apply
Knowing when to apply for a business loan is critical. Leave it too late and your business suffers through under-financing; apply too soon and you will find your company shouldering unnecessary interest payments.
Every bank and many financial institutions offer business loans; the rates and amounts they offer depend on a number of factors, such as:
- Do you have a clear and rational business plan for your company, showing projected, realistic cash flows?
- Do you or your business have any assets that can be offered as collateral?
- What is your credit rating?
- What is your business' profitability and trading history?
- What is your stake in your business? You are asking the bank to take a risk, they want to know that you also have something to lose
- Do you know your market and can you convince your provider that you do?
Before initiating negotiations concerning business loans make sure that all the above questions can be answered and that all the available documentation is available to the lender. Generally a bank or a building society will also run an independent credit check. Most high street banks offer business loans as part of their business services.