Article published by : Jack Fancher on Saturday, March 21, 2020 - Viewed 232 times

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Category : Finance

A Guide To Small Business Loans



It's an unfortunate fact that new businesses often fail within their first year. More often than not this is because of a lack of viable funding and not because of a poor product or unfeasible business plan. New ventures take time to get off the ground but during these initial weeks, months or even years the business still needs capital to proceed through the early stages of company life. Small business loans generate this initial injection of cash but are often ignored because they are considered too difficult to obtain or a company would rather survive on its own two feet.

How to get a business loan

This is actually a surprisingly easy topic to cover. It is more complicated than simply completing an application form and submitting it to your bank manager, but it needn't be as complicated as a lot of new business owners believe it to be. New businesses need a convincing and compelling business plan, whereas an established company should present detailed financial records going back three years. As well as this it will also be necessary to detail the loan itself including the amount you wish to borrow, the period you wish to borrow it for, how much you will repay and any collateral you will be using.

•The business loan application process

The actual process of getting a business loan is a simple one in basic principle. You will need to apply for the business loan usually through a major lender and you will subsequently have your application accepted or refused. Then you can use the money as set out in your business plan and loan application, ensuring you make the necessary repayments as agreed. The actual process of how to get a business loan is a more complex routine in reality.

•How to get a business loan - Preparation

The first, and possibly most important step is research and preparation. You must provide a full business plan, details of how much you want to borrow and when you intend to repay it. How to get a business loan is all about the preparation of this information and done properly it can greatly increase your chances of receiving the funds you need. Done incorrectly or omitted completely and you stand very little chance of being accepted for the loan.

•How to get a business loan - Being realistic and sensible

Lenders do not offer a bottomless pit of money to new businesses and their acceptance policies are fairly stringent. It is vital that you are realistic in terms of the loan schedule and amount. Asking for too much money will instantly set off alarm bells, as will asking to repay it over too long or an unrealistically short period of time. Don't sell yourself short but do be realistic. Also be truthful because most business loan advisers are well experienced and can spot a mistake or false information from a mile off.

•How to get a business loan - Forecasting and projecting

As well as providing a business plan and other supporting evidence you will need to provide a realistic assessment of your budget over the next twelve months. Obviously you can't guarantee an amount of customers but you can make a fairly accurate assessment of how well your company will be performing.
A business loan can be the difference between a successful startup company and a failed business idea. It provides a business with the financial means to make purchases, hire staff and pay for work that needs doing. Only by completing an application with a business loan lender and giving all of the required information do you stand a good chance of having your application accepted. Prepare, be realistic and provide all the information required.

Using business loan brokers
Business loan brokers have access to many deals from various companies and can often help you to achieve the best possible business loan rates for your circumstances. Brokers also have regular access to companies that are offering a special on business loans in the uk and can even help you obtain a business loan with bad credit. There are other options available to financially aid any business.

Why use business loan brokers?

As well as business loans that are available from banks and other major lenders, there are also a number of appropriate financial products available through government agencies and other potential sources. Potentially there could be hundreds of different loans that you have access to, without really knowing which would be best for you.
Unless you deal with these lending companies on a daily basis, like business loan brokers do, it is virtually impossible to keep on top of every loan on offer. Business loan brokers are privy to all of this information and a lot more besides.

•Access to less publicized loans

Business loan brokers are in regular contact with lenders. As well as having access to most of all the lenders in the market and knowing the type of information each lender looks for, they also have access to less publicized companies and loans. Business loan brokers may have details of an appropriate loan that you would not have known about without their assistance.
Not all loans are published and there are some smaller lenders that simply don't have the same financial power that the major lenders do. This means their products do not receive the same level of publicity.

•Utilizing the experience of a broker

Business loan brokers should be experienced in their field. This experience and knowledge means that they should be able to scour the hundreds, possibly thousands, of government grants and government loans in order to find loans through this avenue.
Without using business loan brokers it would be necessary to scour through every single one yourself and determine whether or not you and your business are viable applicants for the loan in question. This is time consuming and painstaking, a combination that will often lead to you missing important information or completely missing a loan offering that could be your best option.

•Sourcing alternative funding possibilities

As well as loans, many business loan brokers may also be able to recommend venture capitalists looking to invest in opportunities just like your own. Venture capitalists offer money in exchange for a portion of your business and a seat on the board. They expect to make a considerable return on investment within a fairly short space of time (usually 2 to 10 years) and whether you choose to use venture capital or not will be a personal decision. Many choose traditional business loans because the repayments do not increase according to the success of your business.

Other funding possibilities: Government loans
Government business loans are generally more difficult to obtain than a small business loan but they do offer preferential rates and repayment terms if you are successful. Applying through a small business association means that if you are successful in your application, the association acts as a guarantor to your loan.
Other funding possibilities: Venture Capital

If you are lucky you may be able to find a venture capitalist willing to invest in your company for a relatively short period of time (usually up to ten years) in the hope of making five or ten times their investment back in that space of time. The "application" for venture capital isn't as rigorous and steadfast as with a bank loan but venture capital is only usually available to relatively young companies with a sound business plan.

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Keywords: working capital loan for new business, apply for working capital loan, startup business loans no collateral

By: Jack Fancher

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