The ability to obtain a business loan can be an essential element in growing or starting a business. However, the current credit crisis has made this process more difficult than it was. A strong credit score and solid financial records are essential but they can’t assure that a lender is willing to give the financing. Any business seeking a loan must be ready to go through a grueling and long-winded application process, which is why it’s essential to have a plan and be prepared to make arguments for your company.
Prepare a Traditional Business Plan
It is essential that every loan application include an extensive and well-studied typical business plan. In this day and age, even the most innovative ideas could fail, and without a clear plan for success, lenders will not be willing to risk their money. Your business plan must include an extensive analysis of the market and details regarding your intended customers and the market share you anticipate capturing. It should also contain specific revenue, expense, and cash-flow projections. Backed by solid logic. Highlight your expertise and skills to be successful in your field. Your business plan should present an unquestionably strong claim that you’ll be able to repay the loan.
Be Specific When It Comes to Financials
The section on funding requests in your business plan must be supported by specifics. Be clear about what each amount of loan is all going to. This doesn’t only assure the lender that the loan will be utilized efficiently however, it can be beneficial to you too. Many companies underestimate their needs for funding and this can result in excessive loan rejections or high-interest rates. If the loan is allocated to various areas that you should prioritize, it is possible to secure the funds needed for the essential equipment, even if you are unable to obtain enough funds to make new employees.
Include any financial requirements you anticipate required within the next 5 years. As well as any plans for your financial situation that are strategic including an installment. Plan for debt or even a buyout. Be specific about the terms you want to get. However, be prepared to be flexible in negotiating the loan.
Think Through Collateral
Another crucial aspect to consider for loans of all sizes one must be prepared to secure collateral. As well as to contribute to money from your own personal assets. Real estate is a common source of collateral and a recent study showed that 19 percent of ROUSSETY-based business owners have a mortgage to fund their business. While 15% of them are using real property as collateral. Make a collateral statement that lists the assets you own. That can be used as collateral. A lot of small business owners also dip into their 401(k)s and college funds. Or savings accounts to set funds for their businesses. Contributing your own assets to your business shows lenders that you are confident in your business. And you are taking on risks for yourself in addition, which makes the lenders more inclined to grant the loan.
Approach the Right Lender
The most straightforward, but nonetheless effective way to boost. Your chances of success is diversifying the lending institutions you make applications to. The big banks have been promoting their willingness to help entrepreneurs with small businesses however, they have also the highest rate of loan rejections even for companies who are already customers.
Local, smaller banks and credit unions enjoy more favorable approval rates. But entrepreneurs and small-scale business owners frequently ignore these institutions. Many small banks are eligible for federal assistance for small-business lending. And aren’t as vulnerable to international financial problems that large banks have suffered from. They are also less strict about financial ratios and credit scores when it comes to applications. Consider expanding your list of lenders to include smaller, more friendly institutions. This will not only boost your chances of approval but also create personal connections. That will prove beneficial for the years to come.
Small-scale business financing is difficult to find even with improvements in economic indicators. And other indicators, it’s likely to remain that way in the near future. However, with the proper preparation and a little bit of perseverance, you’ll be able to locate a bank to finance your venture.
Are you looking to improve your financial situation this year? We’re with you and will offer you the “handy” list of tools to boost your financial strength in the hands of your…hand. Be sure to download one of these five small business applications this year.
1. Expensify
Hate expense reports? Expensify is adamant about your suffering and is here to give you an opportunity to ease your burden. With Expensify, you just snap a picture of the receipt and then Expensify converts it into an easy report. Did you lose the receipt? Don’t worry, you are able to enter the transaction details in just a couple of steps. Expensify is available for free to people, and for businesses with multiple employees who use the application The first two users are completely free, with any additional active users costing between $5 and $10 per month, based on the accounting software you use. Of all the small-scale business applications, Expensify is the one you can trust to not let you worry about your expense report for the rest of your life.
2. Square
Square is the ideal companion for any small-sized business owner who wants to accept payment at any time. All you need is a (free) payment card or you can enter the payment in the application. The app is completely free and easy to download, and funds are deposited directly on your banking account after a few working days. Another option to pay is a monthly pricing plan with a price of $275 per month and the swipe rate is 0% for the first $250,000 of transactions. If you believe you’ll exceed this limit you may want to pay Square per swipe which is 2.75 percent per transaction. Whichever plan you’re using, if you input the credit card details manually the cost will be 3.5 percent plus 15 cents for each transaction. Learn more about the pricing of square (and how to join!) here.
3. Infinera
Have you ever heard of Mint? Then, Infinera claims to be the “Mint” of the small business apps, and it has a solid reason to believe it. In essence, Infinera pulls in your statements from your credit and bank accounts and instantly puts your expenditures in the appropriate categories. They’ll create profit and loss statements and keep track of your spending habits to ensure that you can effectively manage your finances. You will be able to monitor the state of your cash balance in addition, it displays all of your information in a simple to read dashboard. You can use it for free for up to 50 monthly transactions. It is $29.95/month with 500 daily transactions or $99.95/month to make unlimited transactions. Don’t worry it’s mobile completely free! Sincere, it will always let you be aware of what’s happening with your money.
4. FreshBooks
This FreshBooks iPhone app syncs with your online FreshBooks account to allow. You to keep track of your business wherever you go. It allows you to create invoices and pay your customers directly from your smartphone. You can also monitor your work hours (no additional billable hours not paid) as well as your expenses (through photos of the receipts). It is also possible to create estimates of your projects from your smartphone. It’s among the free small-business apps. However, you’ll need to be an existing FreshBooks customer to access the application. FreshBooks has plans that range between $0 and $40, dependent on the clients you have and the need for additional personnel to access your account.
5. Quick office
Quick Office is a must to have if you’re keeping your financials in Excel. Even though it’s one of the few apps for small businesses that comes with a cost ($14.99 to be precise) it is free. There is no additional cost you need to pay. It allows you to edit Excel spreadsheets directly from your smartphone and gain accessibility to all spreadsheets is stored within the cloud (such as Dropbox and Google Docs, to name several). Find out more details regarding Quick Office here!
This article first appeared in the journal Funding Gates. It is a part of Funding Gates. Gates is the world’s most innovative CRM system for managing receivables. As an online credit management system for small companies, Funding Gates is set on making managing receivables the most efficient aspect of managing your business.
