One of the most frequent requests we deal with is how to get funding for a business. Hence this article about how to make it easy to get a business loan – what do you have to do to make it happen?
1) Apply for loan funding when you don’t need it!
Sometimes, the problem is the reason you need funding. If your business is in trouble then why should anyone lend you money? So the first point is to always plan ahead so you are aware of your businesses cashflow needs; the point being that applying when you don’t need the money is always the best place to start from!
2) Only profitable businesses need apply
When looking at your ability to repay a loan, your lender will want to know that you have profits, because that is what is going to repay their loan! You might be providing annual accounts or management accounts or business plan forecasts as part of your application, and they need to look as good as possible.
3) Bad borrowers can’t get cheap credit
If there are any issues with either your personal or the business’s credit rating then fix them before applying. A CCJ sitting on your file will stop most lenders from lending to you…and the ones who will think about lending to you will want to charge you a horrendous interest rate to take account of the risk. So don’t get them in the first place! If you do have them then deal with them – pay them off and tidy up your credit rating.
4) Don’t just think about term loans
Borrowing money can come in a huge variety of forms and term loans are just one of them. Sometimes talking to somebody about your circumstances can reveal loan types that you weren’t previously thinking of. What’s more, term loans are often harder to get than asset finance or invoice finance.
5) Borrowing with security is easier
If you can offer security to a lender then that will make it easier to borrow. Mortgages, vehicle or equipment finance and factoring or invoice finance are generally the easiest forms of loan because the lender has security for their loan. Loans without a formal form of security often require you to give a personal guarantee.
6) Mainstream or alternative lender?
It is no secret that the mainstream or High Street lenders offer the cheapest interest rates – and this helps them to cherry-pick those deals they like best and reject others. However, there are several hundred lenders in the UK – which means there are lenders out there for all but the most extreme of lending situations. This is where getting help becomes essential. As accountants we have links to plenty of lenders and to brokers who know even more lenders.
If you need help looking for a lender then get in touch and see how we can help you prepare and then find one to apply to.
