(Newswire.net — March 31, 2020) — You might imagine that successful businesses don’t need to borrow money. That isn’t entirely true. Even big companies still need to borrow money occasionally when they’re expanding. They might want to borrow cash to lease or buy new premises to manufacture new products, or to hire new employees. Smaller companies are even more likely to need to borrow money. Getting a business off the ground is an expensive task, and if often requires far more money than you have in the bank. If you need to borrow money for business purposes, don’t consider yourself a failure. You’re a long way from being alone.
To give you an idea of what we’re talking about, consider this. The largest entertainment company in the world is Disney. Disney appears to be buying everything recently, from Marvel to FOX. That gives the outside world the impression that they have limitless cash reserves. One look at their accounts from 2019 will dispel that myth. Disney is actually carrying more than fifty billion US dollars in debt. It’s well-structured debt, and maintaining repayments on it isn’t a problem for the mega-corporation, but it’s still debt. If companies of Disney’s size debt, it’s inevitable that your company will accrue some eventually, too.
Going about the task of applying for business finance can be a daunting prospect. You’re likely to worry about what happens if lenders reject your proposals. You might spend hours poring over the finer points of your loan application, wondering if you’ve phrased everything the right way. Even if you think you’ve done everything right, you’ll probably still worry about the long-term consequences of borrowing money if the deal isn’t right. What if you can’t afford the repayments? What if you’re unable to repay the loan at all?
Worries like these are inevitable. Ultimately, borrowing any money against a business plan that you haven’t had the chance to execute yet is a gamble, just as surely as playing enchanted prince is. That’s not the only similarity between applying for lending and playing games on online slots websites. You’ll only walk away from online slots as a winner if all the right symbols line up, and you’ll only get your loan if every telltale ‘symbol’ lines up correctly to the person assessing your application. There’s still an important difference, though. You don’t have any control over what happens in online slots. With your loan application, you have total control – and we’re here to show you how to get it right.
Get Your Personal Credit In Order First
The financial climate isn’t exactly favorable to lending at the moment. That’s one problem. Another problem is that lending to businesses is generally seen as riskier than lending to individuals. If you’ve never applied for finance for your business before, your third issue is that lenders don’t have any credit history for your company. That makes it hard for them to assess whether you can be relied upon to repay your debt. Because of that, they’ll assess you as an individual, and if your credit history is imperfect, you’ll have problems. Before applying for any business lending, knock your personal credit report into the best shape possible. Pay down or pay off any credit cards and loans. Get out of your overdraft if you’re in it. Ensure everything is paid by its due date.
Don’t Go Straight To Your Bank
We’ve already said that banks are hard to acquire finance from at the moment – so why bother with them at all? There are many types of business that banks are wary of lending money to because of their high failure rates, with restaurants being the worst offenders of all for suddenly closing and leaving debt in their wake. A bank might not understand your situation – but nonprofit or specialist lenders will. Peer to peer lending companies exist in every developed nation in the world, and there’s no reason you shouldn’t have access to them. If they’re willing to help you, they’ll often do so at lower rates than your bank would charge. Look them up and speak to them.
Have Collateral
Your bank or lender wants to know how they’re going to get their money back, and the answer ‘from our business income’ won’t cut it. They’ll want to know what happens if the business fails. That’s where you need to have collateral to offer to them. Collateral is an asset (or a set of assets) that you can liquidize to refund your lender if the worst were to happen. A lender that has access to collateral is more likely to be relaxed about lending you money, and more likely to do so at a reasonable rate. Don’t use your own home or assets for this purpose if possible. Business assets are a better choice, be that property, commercial vehicles, or equipment.
Apply For More Than You Think You Need
This might sound like an absurd idea, but hear us out on this. Far too many businesses are nervous about borrowing money, and so they borrow too little because they don’t want the debt hanging over them. This can lead to the money borrowed being insufficient for the purpose the money was borrowed for, and so the company runs out of money before it can achieve its objective. Their only option at that point is to come back to ask for more money, and they’re likely to be refused because it looks like their business plan has failed. Borrowing more money than you believe you need will do two things for you. Firstly it averts any risk of you running out of cash due to unforeseen expenses. Secondly, it provides you with a buffer. If it’s taking a little longer than you expected to see the financial benefits of the money you spent, you can use the excess money you borrowed as loan repayments until everything is running as you want it to. You don’t have to spend the extra money just because it’s there – store it in a high-interest account and keep it for emergencies. One will always turn up eventually!
We wish that we could give you a guaranteed way of gaining business loan acceptance, but no such method exists. Follow our advice above, make sure your personal credit is in order, offer assets as security, and shop around as much as you can. That’s our advice, and that’s how we believe you’ll have the best chance of getting the financial support you need.