Having a business idea is only the first step in a long series of decisions you’ll make — and the next step is to secure funding for it. You can do this by pitching your idea to investors, borrowing from friends, relatives, or commercial lending companies like iCASH. Since most startup owners have zero track record or equity, commercial lenders base their decision to borrow on the business plan and the owner’s ability to execute it.
Commercial lending companies or online lenders are indeed conservative. Hence, they will like to know that their money is secure in whatever venture you invest in. They have to be confident that you will repay the loan, otherwise your assets will be liquidated when you default. Therefore, you have to do your best to assure the lender of your confidence in your business and its potential for success. If you can’t do this, you will most likely not secure the funding you need.
The following are tips that will help you secure the right loan for your startup:
Have a Business Plan.
Conduct in-depth research on every segment of your startup. It will help you show the potential lender that you have done your homework. Know your market and equip yourself with the required expertise and systems to execute your business plan. You can include your resume to confirm that you have what it takes to run the project. You can also include a cash flow projection of at least 12 months to demonstrate that you know what to expect.
Know Your Needs.
Provide accurate figures or close estimates of the amount of money that you need. Also, provide information on how the funds will be used, the duration the loan should extend for, and how you intend to take to pay it back.
Have a Strong Credit Score.
Before you apply for a loan, confirm your credit score. If it is low, dedicate a couple of months to improving it by paying all your bills on time. Doing this will improve your credit score and make you more eligible for a loan.
Provide Details On Your Current Situation.
If your startup is already underway, provide a report with key performance indicators from your business plan. Also, provide accurate and up-to-date information on the financial state of things. Understand these financials and be ready to discuss them. Ensure you are up to date on all required remittances.
After the initial meeting or application, promptly provide all additional information they request. Don’t hide any results, especially negative ones. Instead, be forthcoming and explain the situation, along with how you are trying to remedy it.
If your application is rejected for any reason, don’t give up. Find out why this happened and get as much information as possible. Adjust your plan and presentation with the information you get. Ask for recommendations to other potential lenders before trying again. Eventually, you will find somebody willing to take a bet on you.