A business start-up loan is one of the most valuable resources a new business will need. It can help them to cover all the initial costs needed when setting up a company and put you in a great position to springboard yourself into your chosen industry. Here is everything you need to know about start-up business loans.
Write a Detailed Plan
You are going to need a fully detailed plan with everything a lender is going to need to know before even considering a loan. This plan needs to layout everything to do with the loan. You will need to provide a business plan in addition to the breakdown of everything you intend to use the loan for. Be transparent and don’t try to complicate it with jargon; confusing the banker or lender is only going to make them less likely to grant you the loan.
There may also be a requirement for you to submit a repayment plan. This will detail the schedule you intend to follow when paying money back to the lender. They will give you a time period to pay it back in and, for your own comfort, you should look for loans which do not have any early repayment fees if you think you can easily beat their time-frame.
Have a Good Financial Background
As the business owner, you are going to need a good financial background to help you apply for the loan. A poor credit score might not necessarily prohibit you from receiving a loan but it might make the process a little trickier.
A good credit score will show that you know how to handle money in your personal life responsibly. Therefore, you look like a more trustworthy individual to the lender as they know you can handle your own money. They can then trust you to correctly and responsibly handle the large amounts of money that come with a start-up loan.
If you feel like your credit score is currently lacking somewhat, spend the months in the run-up to your proposal making sure that it is the best it can be. Additionally, it is important to remember that you cannot apply for a start-up loan if you are currently under any restrictions from a declaration of bankruptcy.
Submit a Cash Flow Forecast
Alongside the business and repayment plans, you will most likely have to submit a cash flow forecast. This is your prediction of how much net income your business is likely to receive when in full operation. It is extremely important to the lender as it will let them know if you are likely to be able to afford the repayments and it will prove that this is indeed a viable business.
Make sure you research your chosen industry and include all the information you need to provide an accurate forecast.
The most important thing you need when applying for a start-up loan is honesty. Transform yourself into as positive a candidate as possible and deliver a killer business plan. Before you know it, the money you need will be yours.
