It can be exciting, preparing to start a new business. The hardest part is often finding the funding to get yourself set up and launched. There are many things that need to be purchased before you ever make a profit.
Many new businesses don't start with office space - they may be run out of your home or garage for years. You may need money to purchase equipment, such as raw materials or specialist software. You may also need to secure a manufacturer for your product or hire a team to supply your services.
A start-up loan can help you fund the early needs of your business, while giving you much-needed time to pay back the money. But securing a loan from a bank is not easy.
Here's how to improve your application chances with proper preparation.
Your credit rating
It's important to start thinking about your credit ahead of time, if you can. Start-up loans, like any other credit application, are partially decided based on your credit history.
Acquire a copy of your credit report as soon as possible when you begin thinking about getting a loan. You can use this as a starting point to see where you need to improve.
Your credit score is important - however, you need to also assess 'accounts in collections' (old unpaid debts), even if you are no longer being pursued for payment. New lenders want to see that you can follow through with your commitments, and a history of leaving debts unpaid doesn't look good.
If you're unable to pay off the debts right away, it may be effective to dispute the charges. If there were extenuating circumstances, such as an illness or death in the family, be prepared to supply documentation to support your claim.
A credit repair service may be necessary if you need better credit quickly.
Your business plan
Your lender is also going to be interested in what you plan to do with the money you borrow. A detailed business plan is a necessity. If you already have interested investors or a customer base, provide proof.
Attention to detail is key when you are outlining your business plan. Do your research on every item you plan to purchase and every service you need, and justify any expensive choices. This shows that you care about sticking to a budget and are savvy when it comes to costs.
An estimated timeline for launch and a breakdown of revenue expectations can also be helpful.
Most people have a few friends or colleagues that they use every time they need a reference for an application. It pays to think about how suitable they are when applying for a loan, however. Your best friend may be very supportive, but they probably won't have answers to the questions a lending company will ask.
It is important to have references that can speak about your work ethic and financial dependability. A variety of personal and business references is the best choice.
A start-up loan may be a necessity to get your business off the ground. As soon as you begin to consider this option, it is important to assess your credit situation, create a convincing business plan and assemble good references.
With good preparation, your chances of receiving a business loan will be much higher.
Sponsored post. Copyright © 2018 Mian Azhar, technical writer, author and blogger.