You may need to secure a business loan if your business in need of some extra funding. When you are thinking about starting a new business or expanding your current business, it’s important to get everything in place, especially how you plan to fund the business development.
Business finance is normal. When it comes to getting utilising one, it can get messy, quick. If you’re not careful and strategic with how you use your funds, your business can suffer in the long run. A plan, is therefore needed.
Without further ado, we will present six easy steps to secure a business loan. We will give you some basic methods that you can use to maximise your chances of getting approved for a business loan. More importantly, the will help you utilise the loan to your best capabilities.
1. Make a Plan
With business loans, you do not fool around. In business, a lot of purchases are made with money that you do not own. So, you have to make the best of it. In this regard, you need a solid business plan to help you make sense of everything. At same time you need to consider that you are applying for a loan from a lender. It is the lender who is taking a risk with their money. They are investing into your business (in a sense). For this, they may request a sound business plan that outlines your goals and objectives.
2. How Much Do You Need?
Business loans can go range from five thousand dollars to hundreds of thousands depending on the type of business you are operating. Before you request a loan amount, you must consider what you will do with the money. Make a list or spreadsheet that outlines what you need. Research and enquire for pricing. Once you establish the loan amount necessary, figure out how you will pay it back. Do you have the enough incoming revenue to help pay the repayments?
Don’t neglect this step because uncovered debts might ruin all the progress that your company made after using the loan. Explain clearly and concisely how much money you need. This will make the lender understand that you know what you are doing and raise your chances of getting the loan application approved.
3. What Do You Need It For?
To understand how much you need, you must first do a few calculations. Business loans can help you pay some of your employees, hire new workers, increase your inventory, expand or renovate and invest in new equipment. Add all the costs, and that sum should roughly reflect how much you need to borrow. Alternatively you can use a budgeting calculator to help you manage your business expenses.
Tip: Never borrow more than you need, even if it is approved. Stick to your budget.
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4. How Long Will You Need the Loan?
Business loans come with a loan term that can make you pay more money in the long run. It is all about the interest rates; so, you should ask your lender about them. You will pay more than you borrowed, that is the fact, but what that “more” means depends on your lender.
Make sure you read their terms and conditions. If there are any things that are unclear, raise your concerns with them. The last thing you need is a hidden fee popping up.
5. How Do You Plan to Pay?
Ask yourself this question before talking to the lender. A bank will likely refuse your request if it notices that you have no idea how your business is going to pay back the loan. It all goes back to the plan you need to make before applying for the loan. It will make you more trustworthy and responsible in the eyes of the lender, and also help you manage the debt.
Since you are the one who knows your company best, think about how you can make it more profitable with this loan.
5. Double-Check Everything before Signing
Depending on the lender, you may need to supply an extensive portfolio of documentation. This will include personal and business documents. Once submitted, you will receive a lending decision within 24 hours. If everything is okay, make sure that you double check all the terms and conditions. Assess your loan documentation and then sign them when you are ready.
Business loans can come with high-interest rates, and it’s your job to check whether this deal will help you or do you more harm, financially speaking. Because after you sign the contract, not knowing its conditions will not be a good excuse to spare you from respecting them.
Communicate with your lender for every aspect present in the contract: loan term, interest rate, the sum borrowed, repayment terms other fees and taxes.
Before you decide to accept the deal, take into consideration all the pieces of information provided by the lender. More so, think about whether or not the loan is useful to your business’s goals.
Final thoughts
Business loans can help your business get to the next level but knowing how to control such an investment is vital for you and your business. Before applying for such a loan, do some research and try to find the best offer for you. At ALC Commercial, you can find some valuable tips that will help you when you want to get a business loan. Contact us to find out more about our loan options that could be exactly what you were looking for.
