6 Things to Know Before You Get a Business Loan

Every small business owner faces the same problem: they all need more capital to successfully grow their business. No matter how well things are going with sales, marketing, and customer relations, at some point you will need a loan to move forward with the ultimate goals for your business.

However, getting a loan is no small task. It requires careful planning, organization, and a commitment to showing lenders that you are willing to do what it takes to make your business a success. So, if it’s time to move forward with your plans, here are the six areas you need to consider before you can secure those extra funds.

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1. Know what lenders want: Lenders are ultimately there to help you, but that doesn’t mean that they are going to give you money on the spot just because you say you need it. Getting a loan is a complicated process that requires forms, bureaucracy, and professionalism. Lenders want to see that you’ve done you homework and that you’ve come prepared. This is the best way to start the process off on the right foot.
2. Know Your Business: As SmallBusiness.co.uk pointed out in an article about securing loans, it’s important that you “Take a very close look at the amount of money you think you will need. Know exactly how much money you need to raise, as you have to be able to justify every penny to a lender.” A big part of determining the exact amount you need is by knowing your business. Take a hard look at your business plan, future projections, and assets. Having detailed records that easily conveys information in these areas will make it easier for you to determine what you need, and what you can put up as collateral.
3. Know your your assets: According to a helpful article on collateral from Inc, “Most commonly, collateral is real property (i.e. an owner-occupied home), but it can also be represented by your business’s inventory, cash savings or deposits, and equipment.” It’s true that most businesses will find that a secured loan on property is their best option after reviewing their current assets, but be sure too look at all options. Here you can see secured loans explained.
4. Know the alternatives: If you don’t have any equipment, cash reserves, or property that will work well as collateral, there are also other options to consider for raising funds. The world of peer-to-peer funding is growing both in terms of users and respect. Fine Extra recently reported new marketplace services that will work to help out small businesses that might not be able to secure a traditional loan due to credit or collateral issues.
5. Know that negotiations Can help: The most important thing is remaining professional and trying to work with your potential lender, but that doesn’t mean you shouldn’t fight for the value of your business. Requesting an appraisal review and feeling comfortable discussing your ideal terms are some of the best ways to make sure you will get the loan you deserve.
6. Know that a loan is only the beginning: The point of these tips is to help you look more prepared to take on the responsibility of a business loan, but then it will be time to put that money to good use. Take a loan as a great opportunity, and don’t let it go to waste!