Home Insights & Advice How to get business loans the right way

How to get business loans the right way

by John Saunders
19th Jan 22 4:00 pm

So, you’ve decided that getting a business loan is the crucial next step for your company. Now come the tasks required to ensure you secure the best possible deal, on terms that are most favourable for you. Below, we will discuss what must not be overlooked. You can be sure your loan provider certainly won’t miss anything!

Highlight current capital investment

 Loan providers, whether they be high-street banks or others, are more likely to grant you the loan if capital investment to date is high. This doesn’t necessarily have to be money you’ve put into the company as the owner, it could have come from other investors.

Showing the provider everything that’s been achieved with the current amount of investment can make all the difference between securing the loan you want or not.

Show how impressive your cash flow is

 From a year onwards since the business began trading, you can show loan providers your cash flow figures. All providers will want to see a strong cash flow otherwise the risk lending to your company will heighten.

It’s ideal to put together a cash flow forecast for the next 3 years for the business. This will help show lenders that you can easily meet repayments. Time and time again this has been proven to be the key factor in obtaining a loan. You don’t need to the profits that investors using great crypto software such as crypto-robopro.com/tr have enjoyed, but showing demonstrable growth is extremely important.

Current financial strength

 Similar to providing your cash flow information, including your current financial statements in great detail will help highlight the company’s strength. Make sure to highlight your gross profit and net profit. Furthermore, it’s a good idea to show future revenue and profit projections that are likely to be achieved with the loan that you’re asking for.

Current collateral for the business

 Many small businesses look to acquire unsecured loans. However, these typically offer smaller amounts compared to secured ones. Therefore, if you’re looking to gain a significant amount of funds then you’ll need a secured loan.

Although there is another option if you don’t want your personal assets to be at risk. Business collateral can also be offered. This could include using the businesses’ building (if it’s owned), or additional assets to secure the loan.

Proving your industry understanding

 To further convince lenders, a good demonstration of industry awareness is needed. This will show them you know of current trends and possibly future ones that may happen. Provide the lender with all this information in a clear way, such as a short PowerPoint presentation. Make sure to include all market research that was carried out. Make the presentation sharp and short (avoid “death by Powerpoint” presentations) with relevant slides. But also be prepared to answer any possible question raised in detail.

Bring references

 Lastly, you want to bring some character references. This can show lenders that you’re seen positively with individuals you’ve done business with previously. An ideal number of references to get would be between three to five. However, make sure they come from people that aren’t connected in any way. Even if each one consists of just a couple of lines, they can make a big impact on whether you get approved or not.

 

The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision. London Loves Business bears no responsibility for any gains or losses.

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