It is no secret that the lending landscape for small and startup businesses is tough and applying for loans can very easily become a demoralising tale of deflection and rejection. But, before you start calling in too many favours or begging your relatives to help you out with startup funding, take a look at these tips and action points that are well worth having in mind if you are looking for a loan to finance your fledgeling business.
Related: How to find funding for your company
1. Be honest with your potential lenders
It is easy to think that lenders will want to hear all kinds of amazing things about your business and its money-making potential but what they really want is the truth. It can be tempting to sugar-coat or overstate the details of your business and exaggerate its earning potential, but this is very often counter-productive when it comes to making loan applications. You are better off getting your facts straight and making your application on the basis of entirely accurate information and realistic projections.
2. Get good advice
As an ambitious entrepreneur, you may well be required to perform a wide variety of different functions and to embrace new challenges as they come your way. However, becoming an expert in the processes involved in small business lending is going to be too much to ask. Therefore, getting clear guidance and advice on your loan applications from experienced experts in the field can make a real difference to your chances of successfully securing the financing you’re after.
3. Be realistic in your goals
However much potential you feel that your business might have in the future, it is important in the early stages to be realistic in the goals that you set, certainly when it comes to applying for loans. Small businesses often let ambition get the better of them and aim to borrow relatively very large sums of money even where this isn’t necessary. Clearly, every circumstance is different, but a healthy sense of realism and a relatively modest loan application can often improve the prospects of small companies when it comes to managing finances and overall expectations.
4. Consider all options
The ways in which small and startup companies are funded has changed dramatically over the course of the past five years or so. The relative reluctance among mainstream lenders to offer loan deals even to fast-growing businesses, along with technological advances and innovations, has led to the rise of alternative sources of funding becoming much more prevalent and increasingly popular. So much so in fact that there are now many more ways to access finance than many entrepreneurs and small business bosses actually realise.
The route to finding the finance you need as a startup company might not always be straightforward but with the right approach and the requisite persistence, there is no reason to believe that appropriate funding options aren’t out there and accessible whatever your circumstances.
Related: Business loans in the UK