A lot of loan applications are submitted to financial institutions but only a few get any kind of favorable response. It is very important for you to understand that there are certain prerequisites that can help increase your odds of bagging that loan that you need to grow your business. Here are five tips to follow.
Have A Solid Business Plan
If you are looking to get a loan from a financial institution, you will need to provide a comprehensive business plan. Your business plan is meant to explain the details of how you intend to use the loan to grow your business. You must also show that you have done enough research and understand what the business you are looking to start entails. A good business plan helps you sort out the initial plans for your business so you can see how feasible certain things are.
Prepare Part Of The Startup Fund
You should be willing to go to great lengths for what you believe, sometimes that demands that you have to set aside some money to offset the initial cost. You might not be able to get the funds from your savings alone, you can also get help from friends and families who believe in your business. If you have other sources apart from your friends and families, great! Try to see how much you can get without first reaching out to the financial institutions.
Having a portion of your start-up capital prepared will give you a good chance to get a loan. Do not forget that most times, some of the institutions will examine your assets to know whether or not they will approve your loan. Apart from the fact that you will get a good chance of getting loans from the lenders, you also help yourself by reducing the amount of interest you will eventually pay on loans granted.
Have A Great Credit Score
You are more likely to land a business startup loan if you have clean records and a sound credit score. With a good credit score, you enjoy other benefits. Not only are you seen as someone who is trustworthy, but you also entitled to lower interest rates. This will provide you with enough money to help you run your company’s daily operations and help make progress. A good thing for you to do is to make sure you take a closer look at your credit score to see if it’s worth the use.
If your credit score is really not up to par, then you can work on it. To work on your credit score, try doing the following.
Make sure you pay all your outstanding debts on time, this gives you a good score.
Evaluate your score and make sure there are no errors in it. If you discover any errors, ask that they be corrected immediately.
Taking multiple loans without repaying them on time can harm your credit score.
Try Some Competitions
There are several entrepreneurial competitions you can apply for that can give you the start-up loan you desire. If you are good enough, you can also apply for competitions that give out grants. Try to explore the options and you will be amazed at the number of open competitions that can help you with your funding if your business is creative enough.
Looking forward to joining a competition? Then you should try some of these opportunities below:
- CleanTeach Challenge
- NACUE Varsity Pitch Competition
- The Mayor’s Entrepreneur Competition
- Hatch Business Competition
The list is not exhaustive but those are some opportunities you can try out. Sometimes, you might not win, but you might get connections and other opportunities from such competitions.
Think Like You Have An Investor Already
Another alternative to getting a start up loan are ready investors. Part of your business strategy should be to receive funding from more than one source. If investors are part of your sources, then you need to start strategizing how to meet with them. No investor puts down money on a project they do not consider feasible. From the moment you decide to get an investor to help grow your business, you need to act like you have found one already, and see how far that gets you. The level of seriousness you show in your business determines the level of seriousness you would get from investors.
If you have no clue as to how to go about strategies for your new business idea, try getting help from some of the successful businesses you know. Get as much information as you need regarding the market and things you need to put in place for your start up. Having a well-defined plan will boost your confidence when you have an opportunity with an investor. Conclusively, every business idea deserves the chance to grow, and one of the most important things is to have adequate funding. With some of the ways outlined above, you can increase your chances of getting a loan with financial institutions and make that business of your dreams come to pass.