If you are thinking of starting a business, you are going to need more than just a dream, vision or desire to get it going. While those things are important, such as drive and willingness to work hard, the most important thing is of course, money. Without it, there is really not much you can do.
Many lenders may not share your enthusiasm. After all, it is their money at stake and if they feel that you’re not onto a winner, then they will not be willing to take a risk and they will probably turn you away. Borrowing the money can be the biggest and hardest obstacle to overcome. Let’s take a look at some things you need to look at before you approach a lender.
1. Strategy For Success
This is important as it will outline your business objectives and how you intend to meet them. This will allow a lender to see exactly what kind of business it is and how you intend to turn it into a profitable one. You will need a marketing strategy and also display your marketing magic to lenders so that they feel confident in you and your idea in order for them to lend you the money. Make sure you can answer these questions:
- Does your plan have a clear objective and measurable targets?
- What strategies will you use to meet those objectives and targets?
2. Check Your Credit Reports
You probably have no idea about your credit report. You might assume that it is in good shape but what if you are mistaken? In Canada, there are some big credit reporting agencies such as Equifax Canada and TransUnion Canada. You may want to order credit reports from them. There may be some discrepancies because some creditors don’t report to them. Sometimes, a creditor is slow with providing updates and so, there could be some differences.
If you find things that are incorrect, you can work with these agencies to put things in order. This can improve your credit rating so that lenders aren’t alarmed and it can give you a greater chance of being approved.
3. Be Meticulous With Documentation
When applying for a small business loan, it is so easy to overlook something and think that everything is in order. Lenders need the slightest hint of something not looking quite right and you will be turned down. When you provide these documents to lenders, they have to be pretty much the latest and up-to-date information.
Make sure that all bank accounts are current and the financial data presented to lenders is of the most recent business month. If anything is not right, then a lender may question whether you have what it takes to handle a business loan.
4. Get Ready To Talk Numbers
Make sure that you are incredibly prepared and know how to talk numbers. If lenders ask you questions and you hesitate and don’t know what figures you should talk about, they may not give you their approval. Any budgetary commitments, percentages and other facts and figures must be something that you’re ready with. If not, you are just an unsure person who walked in from the street and is asking for money.
By knowing your objectives, business models, strategies, marketing plans and just about anything else, a lender will be more inclined to do business. They are not stupid; they can tell if someone knows what they’re talking about or if someone is just hoping to pull it off. If you are prepared and know your numbers, you will have a greater chance of securing a business loan.