Today, turning your business ideas into a reality is entirely possible without a great deal of money, which is excellent if you want to get started as quickly as possible and on a small budget. However, in certain industries, it’s still essential to have money to invest a considerable amount into the company from the start. For many new entrepreneurs, a business loan is essential to cover this. However, attaining business funding tends to be much easier said than done. If you have a poor credit history, for example, this could seriously hinder your chance of being successfully accepted for a business loan. And, more and more banks are becoming increasingly choosey with the candidates that they accept, meaning that the likelihood of getting a traditional business loan from the bank is getting smaller. The good news is that there are several things that you can do to boost your chances. We’ve listed some top tips to help you improve your chances of getting the funding that you need.
Find a Co-Signer:
If you’re being declined for a business loan due to poor credit, finding a co-signer or guarantor could be a good move. A co-signer is somebody who agrees to the loan with you; their job is to cover you in the event that you are unable to repay the money. So, you’ll need to find somebody who not only has a good credit history, but somebody that you can trust and who trusts you, too. Most of the time, a loan which requires a co-signer will not come from the bank, although in certain cases, you may be able to boost your chances of being accepted for a bank loan by applying with a business partner who has a better credit history. Search online for suitable business lenders who will accept your application with a co-signer. Online installment loans are often easier to obtain and manage, too.
Improve Your Credit Score:
If your personal credit score is poor, you might be mistakenly believing that it doesn’t matter as it is only for personal credit purposes. The truth is that somebody who has a poor personal credit score has a very slim chance of being trusted with a business loan. A bad credit score can certainly limit your lending options, so it’s important to be aware of where your credit score stands and what you can do to improve it before you apply for business funding. Go through your credit score to find any errors, and repay as many of your debts as you can. Make sure that all your priority bills are up to date, and have payment plans in place for any debts you can’t afford to clear right away.
There’s no need rely on one lender or type of funding alone when it comes to getting financial backing for your company. It’s not uncommon for people to want to go back to the same lenders and financial institutions that they are already familiar with and perhaps using for something else. For example, perhaps you got your mortgage and credit card from the same bank you have your checking account with, so naturally, you will feel inclined to apply with them again when it comes to getting a business loan. However, limiting your options can be an unwise idea in the long run, since you will be holding yourself back from discovering potentially better deals and lenders who’re more likely to accept you.
Today, there are so many alternatives to borrowing a loan from the bank, so take the time to explore all the options. In fact, you may not even need to borrow money from the bank or a business lender. Crowdfunding, for example, is a popular process where you ask members of the public to donate a small amount of money towards your start-up, often in exchange for shares in the company. This can be a great way to quickly raise funding for your new business, without the need to worry about completing lengthy applications, improving your credit score, or coming up with a repayment plan. Alternatively, angel investors can be very helpful for new and innovative businesses.
Have a Business Plan:
If you’re applying for a loan from the bank in order to fund your business, then it’s never been more important to perfect your well laid out, solid business plan. Lenders will go through your business plan and use it to determine the level of risk that they believe your business will pose. That’s why it’s important to go into detail in your business plan about how you plan to compete with other businesses, deal with financial setbacks, build your customer base, market your brand, and make a profit overall. Go into detail with figures and come up with forecasts for the coming year so that lenders have a clearer idea of how much money you expect your business to make.
Perfect Your Pitch:
When you’re looking to borrow money for your business, it goes without saying that you’re probably going to be required to pitch your idea, both in-person and digitally. As a business owner, good pitching skills are something that you are going to need time and time again in order to succeed, so take some time to improve and perfect your pitch until you can confidently put your ideas across and get other people just as excited about them as you are. If public speaking and pitching to a panel makes you nervous, practice with friends and use meditation and deep breathing techniques to help you get back in control. If you haven’t got any experience with pitching an idea, there are several online resources that you can use to help you improve these skills.
Anybody can start a business, but it’s definitely not as easy for everybody to get business funding. If you’re in need of funds to get your start-up off the ground, these are just some of the best ways to improve your chances of getting what you need.