Starting a business begins with a great idea that is pragmatic and future oriented. It takes dedication to drive a business towards success. Success comes to those who think carefully about each business decision, and are devoted to turning the business into something bigger than what was initially expected.
Even if your abilities and traits go well and beyond those mentioned above, there are many other considerations which affect the running and set up of a new business. One of the foremost is capital that is made available. New business owners could fund their enterprise with their savings, or could look to a bank for getting financial help. However, it is well known that banks are easier to approach for personal loans as opposed to business loans or lines of credit for entrepreneurs. Accordingly, if you’re thinking of approaching a bank to obtain a business loan, you should ensure that your business is seen in the best possible light. An understanding of the following could tip the scales in your favor.
- Build and maintain a favorable Credit History
The credit score of your business will be influenced by the timely repayment of all expenses incurred on credit. As the credit score is an important tool in inspiring confidence in a lender, any irregularities in your repayment history can lead to denial of the loan application. Thus, it is critical that your credit score is attended to and maintained in good standing. In addition, it would be ideal to maintain a repayment schedule for any personal loans, rent, leased items and other income tax liabilities, if any.
- Have a Business Plan and be prepared
When obtaining a business loan, it is critical for banks to ensure that the borrower won’t default. They base their decision on a number of factors including; your past credit score, cash flow forecast, assets in the business, investors in the company, marketing strategy, target market and so on. The above factors could be consolidated and attractively presented within a well-structured business plan. However, most startups forego the preparation of a business plan and overlook its effectiveness and utility. A business plan can play an important role in ensuring due diligence on the part of both the entrepreneur and other stakeholders such as the bank. Accordingly, a business plan could make or break your chances of securing a business loan.
- Consult with Professionals
As indicated above, a bank would like to see a well thought out plan behind any proposal. You could back yourself by indicating that you have consulted a financial adviser or a tax professional when coming up with your business plan; which could be instrumental in building confidence in you as an investment.
Furthermore, Accountants are better able to help you quantify your financing requirements and better qualify you as a worthy candidate by helping you prepare well-structured financial forecasts and provide guidance from a tax perspective