Are you struggling to get some funding for your new venture? Don’t expect an angel investor to pop in and shell out the moolah just like that. That only happens to a small percentage of new businesses. Before you are able to catch the attention of venture capitalists, you just have to find a credit line on you own. One option is to shell out money from your own pocket while another, and a better one, is to take a loan.
Taking a bank loan is no easy task. A bank won’t just hand over money unless they think that your business idea will work. The bright side is they are your best chance of getting funds because they’re in the habit of giving out loans.
Here are 6 tips to get that bank loan for your business.
1. Make the Best Business Plan that you can Make
A business plan is not just for your banker, it is for you too; and the success of your business hinges on it. A business plan consists of 5 basic parts:
Be as detailed as you can be, and don’t miss any of these 5 parts.
2. Have a Financial Plan
Detailed financials have to be ready. Where are you going to use the money? How is it going to benefit the business plan? Here are things you need to cover:
3. Have a Good Credit Score
Your personal credit score is going to weigh in here. Have a bad credit score and your loan application is going to be in deep soup. So before you file in the bank loan application, pull up your credit score.
If you have a bad credit score, the banker will assume that if you can’t even manage your own personal finances, you won’t be able to manage a business’s.
4. Make a pitch in your lender’s shoes
Not everyone gets an opportunity to give a pitch (since banks work more on applications than meetings and pitches). Either ways, you need to know what it means to be in a banker’s shoes to give a successful pitch and get that loan. Any bank is taking a risk when they loan money. You need to convince them that your business is worth the risk. The best way to do that is by stepping in their shoes and telling them how it’s gonna pay off for them big time. Speak in numbers; that’s the only thing that the banker understands.
5. Take a Loan that you can Afford
The best way to get a ‘denied’ stamp on you loan application is to ask for too much money. You need to take an amount that you can afford. Don’t think from your perspective, think from your lender’s. The banker will analyze your current revenue, future plans and how much revenue your business will make and then decide if the loan amount you’re asking for is feasible.
6. Go Local
As a startup, your chances are always better with a local bank. Local banks want to invest in the community and investing in a local startup is just that.
When it comes to getting a loan, make sure you’re in line with these points. Keeping your accounts un-organized and un-presentable is one of the most common mistakes amateur entrepreneurs make. If managing accounts is not your strongest area, get professional accountants in Edmonton sort them out for you.