Getting a small business loan can take your business to the ‘next level’, propelling it into the stratosphere – not literally, that would be fun for all of ten seconds then quickly become impractical… massively impractical.
Recruiting the next businessperson of the year and finding an office space that’s more in line with the vision you have for your business are great goals to have – so how do you go about securing a loan that you’re hoping will pay dividends for your business?
We've created a handy overview, including links to some great tools that will help you along the way.
Do your sums
If you've ever watched the BBC series, Dragons’ Den, then you've almost certainly cringed or delighted at (depending on your sadistic tendencies) the people pitching who don’t know the financials of their fledgling business. The subsequent reaction from the four Dragons is one that has the viewer glued to the screen, in anticipation of multiple fiery balls of flame emanating from the business magnates’ mouths.
Employ an accountant to help you with the figures if necessary, dodge sleep for three nights in a row whilst making yourself go cross-eyed over spreadsheets – do whatever it takes, but do not go to a lender unprepared.
Show you’re committed
No lender is going to be filled with confidence if you don’t show belief in your own business. A great tip is to prove that you have already sourced funding from other avenues, whether that’s through a friend or family, a business grant or even start-up sites like www.kickstarter.com.
www.gov.uk has some fantastic tools to help you secure all the funding you need, even allowing you to search by location, which by our book is just about as handy as it gets!
Show me the money! (I'm going to need to see your business plan first)
Walking into a bank and shouting: “Show me the money!” might seem like a good idea in your head – everyone loves Tom Cruise, right? Wrong. Not bankers. Bankers hate Tom Cruise. OK, we may have completely fabricated that – some may love him – but they adore a good solid business plan more.
You are far more likely to succeed in getting the loan you want if you have a well-prepared plan of action for your business. www.startupdonut.co.uk gives some great advice and links on how to create a business plan, while most banks also offer this service to their customers.
“Everybody, look at me. Come and see how good I look”
If you have a great record in business previously, or have successfully managed a business to make millions, then it’s time to brag about it. OK, chances are you haven’t made your millions already, but you should still communicate any business management skills you have. This will help prove that you are a good candidate to lend to. Don’t be sheepish about it, bring evidence and talk yourself up – this is your time to shine.
Have some equity you can offset the loan against
It doesn't get much more committed than putting your house on it. Lenders are looking for a safe bet and a business start-up is often far from a safe bet.
This all links back to having a great business plan and knowing your financials are solid. Not only will this help you secure the money you’re looking for, but also put your own mind at rest that what you’re doing is actually a good idea!
What other tips or insight would you add to the list? Have you successfully secured a loan for your business and want to share your dos and don’ts? Let us know in the comments section, or send your tweets to @Flexioffices on Twitter.