If you are like many entrepreneurs, chances are you’ve already set up your small business but you need some financial assistance to fuel growth.
Whether it’s funding to acquire a new asset or expanding your current venture, an SME loan will come in handy.
Applying for an SME loan can be daunting if you do not know how to go about it. The following tips should get you off to a superb start.
Research. Prior to choosing an SME loan provider, consider doing research a must. You can start by reading online reviews of potential lenders you are considering.
It would also be a good idea to check if the institution has a good reputation. Go through their websites so you will get a clearer insight of the terms and conditions, alongside the services they are offering. This will make it a lot easier for you to compare and decide which SME loan provider to go for.
Documents. Financial institutions will always be partial to businesses with a robust business plan so make sure you have one handy. Make sure you also have a list of all the needed documents so processing will be smooth sailing.
Keep updated bank statements, income statements, and other financial documents ready in case you would need to present them. Ensure the application is also filled out correctly and free from erasures and errors.
Rates. While this may seem like a given, some borrowers still make the mistake of not checking for the rates before signing on the dotted line.
Know everything there is to know about the loan—fees, costs, charges, and interests, among others. Ensure you fully understand everything before you commit.
Maximize your odds of getting your SME loan approved by keeping the following helpful tips in mind.
- Keep a manageable debt load.
Simply put, the amount of debt that is reflected in your balance sheet is called debt load.
To increase your chances of getting your loan approved, you have to show you will be able to repay the loan you will be granted on top of the current ones you might already have.
Get yourself off to a good start by demonstrating how you can benefit from the new loan and how it will be used. Also, give a forecast of possible additional revenues you expect to gain from the cash infusion.
- Prove that your business has a steady cash flow.
For many lending institutions, cash is still one of the key indicators of a business’ health and future prospects.
If you show that your venture has an ample and consistent cash flow, you assure creditors you have the capability to repay your debts right on schedule.
Be ready to provide tax returns, financial and bank statements, and other financial documents whenever necessary.
- Ensure you have a positive payment history.
Another key factor lenders look into is the payment history of your business.
They need to check if your business pays obligations on time. If you will be presenting a credit report, make sure all the figures that are reflected are accurate.
The report may not indicate relevant trade partners or other lenders who can provide a favorable reference so you may provide those to the lender yourself.
- Demonstrate you have good business insight.
It is easier to get the creditor’s nod if you show foresight when it comes to running your business.
That means you are able to anticipate potential challenges and you already have a plan in place as to how to address them.
Create a robust and comprehensive business plan to prove you have the capabilities to steer your business in the right direction.
Getting an SME loan is relatively easy if you know how. As long as you prepare the needed documents, do the necessary legwork, and prove you have the capability to repay what you will owe, you are a step closer to getting that financing help you need to get your business ahead.