Getting ahead in business can sometimes be challenging. You often need to borrow money to make money, and getting the support of lenders is not always as straightforward as you thought it would be. This can be especially true if you have a startup business with minimal credit history, making it hard for lenders to gather enough financial data to give them peace of mind about your ability to pay back any money they lend you.
Before you give up on conventional borrowing methods altogether, take a moment to consider how you could make your business more attractive to lenders. You might have luck by doing some of the following things.
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Purchasing Tradelines
You might already be familiar with how tradelines can impact an individual’s credit score, but after reading a tradeline supply company review, you might now know their potential for business. If you become an authorized user on another company’s tradeline, you might be able to build up a positive credit history that makes your business look desirable for lending. Tradelines might improve your chances of securing better loan interest rates and even help you achieve better creditor terms for future success.
Develop A Relationship With Your Bank
You might assume that you only need to make an appointment with your bank when you need to borrow money, but your relationship with a lender can start long before you need to make a loan application. Make an appointment with a business banker and help them become familiar with who you are, what your business is, and the goals and challenges it might face in the future. By the time you need funding, lenders are already familiar with who you are.
Have Prepared Answers To Lender Questions
Banks and other lenders won’t lend money to a business just because they need it. You need to create a pitch and have satisfactory answers to the questions you believe they’ll ask. They often want to know how much money you need, how you will use it, your plans for repaying it, and the timeframe for paying it back. They also want to know when you expect to need the funding, especially since funding types, such as U.S. Small Business Administration loans, can take upwards of two months to close. The more information you can provide in your initial lending meeting, the easier it might be to alleviate lender concerns and access the money you need.
Have Your Financial Information Ready To Go
Lenders can’t loan money to businesses based on the owner’s word that they’ll pay it back. Your financial information must do all the talking, so ensure you have this ready when you meet with your potential new lender. At a minimum, you’ll need financial statements, such as your balance sheets, cash flow statements, and income statements. You’ll also need business tax returns, personal tax returns, and bank account statements from the last few months. Depending on the loan type, you might also be required to provide commercial real estate or equipment lease information and a business license and registration details.
Undergo Financial Audits Or Reviews
If you’re trying to entice investors to explore your business as an investment opportunity, financial audits or reviews might be something you consider to make your business more attractive. Audits or financial reviews with high-quality accounting businesses validate your figures and give lenders more confidence in your business’s value. Aim for yearly inspections, but most investors would be satisfied with at least three years of records to show consistency and potential.
Have A Detailed Business Plan
A business plan is the foundation of any successful business and can function as a road map for a company to achieve its business goals. Sometimes, lenders require a detailed business plan to help them make an informed decision about your lending potential. A traditional business plan format incorporates an executive summary that outlines what your company is and why it will be successful. This summary includes a mission statement, company leadership information, product and service details, your employees, and location.
The plan also needs a company description that goes into detail about your company, the problems it solves for consumers, and any competitive advantages it has over similar businesses. This part of your business plan allows you to boast about your strengths. It’s also essential to have a market analysis with details about your target market, organization and management information, marketing and sales plans, and your service or product line. Your funding request and financial projections can form the final segment of your business plan.
End Note
Securing lending for a new or established business can be challenging and time-consuming. However, when you take some of the actions above, you might be well on your way to ensuring your business has everything it needs for future success.
