If you are a business owner, particularly the owner of a new business, a business loan could make the difference and allow you to secure important inventory or equipment, helping you to take the next steps in growing your business. When applying for a business loan, the application process involves multiple steps, so you should ensure you are properly prepared. You should consider the amount of money you will need and be prepared to show how you will utilise this additional funding. This will increase your chances of being successful at securing this important loan and continuing to grow your business.
Determine the loan amount
Before beginning your application, you should decide on the loan amount you wish to apply for. You should consider the amount you are applying for and for what you will use it. It is important to make sure the loan amount that you are applying for is enough to substantiate growth, whilst not being too reliant on the loan and making sure you will have the capability to pay it back further down the line. Having a plan for how you will utilise the funds will make a lender more likely to accept your application.
Prepare a business plan
A business plan is important for adding credibility to your loan application and proving to a lender that they will recoup their loan. You should spend time putting together a detailed business plan including your opportunities for growth, analysis of the current market, and long-term projections of what your finances will look like in the upcoming years. It is also worth deciding when you are going to begin repayment of the loan and how you plan to afford this.
It is worth looking into different lenders and how they operate so that you can assess which one will be most suited to your needs. Lenders will often have different criteria that you must meet in order to be accepted for a loan. You will also want to look at interest rates and repayment terms to see which one suits you best. Choosing a lender that provides you the most reasonable interest rates and flexible repayment will help you ensure that the loan is affordable and beneficial for you.
Check your credit score
One of the most key factors that lenders will consider when assessing your suitability for a loan is your credit score. This is the primary indicator of how reliable you are at paying off money owed and if you can be trusted to repay your loan in good time. You should make sure that you have a good credit score before applying, so paying off any debts and making sure your credit report is in order can help you to secure this important loan. Visit Moneysupermarket.com to check your credit score for free.
For secured business loans, borrowers will be required to put up collateral in the form of assets they own. This may be property or equipment that will cover the value of the loan. If the borrower defaults on a loan, the lender can then seize this collateral to recoup the loan. These secured loans will often have lower interest rates and longer repayment terms due to the protection that the lender has.
If you are a small business owner, or have recently launched your business, we can help. Our team at Bells Accountants can offer our expert advice and support to established businesses and start-ups when it comes to important decisions such as applying for business loans. We are happy to refer you to trusted partner to advise you on the best loans to suit your business. Plus, we can also help you manage your finances and help you navigate this process of growing your business. To discuss your requirements with us, give us a call on 020 8468 1087 or email .