4 key tips to help increase your chances of getting small business financing
As a small business owner, your ability to secure small business financing in reality will determine how successful you are. Unfortunately, some business owners know how to increase their chances of getting a business loan why when the time comes, they cannot secure the loans they need to run their business.
Tip no. 1: Get used to yourself with bankers in your community financial institution
Before applying for a loan, you must know where the institution is in your community issuing loans to businesses like yours. Not every bank specializes in providing business loans and those who can only lend money to businesses in certain industries. Some lenders only lend to businesses at a certain stage of their business cycle. This is why it is important for you to only work with bankers who are familiar with your industry. One great reason why you have to work with banks that know about your industry is because they can give you some solid business suggestions. This advice starts for their experience working with other businesses in your industry and they come to understand the problems they face.
Tip no. 2: You must be able to easily describe your business “proposition” value
You must be clearly able to communicate what value proposition you have. You must work in preparing a business plan that outlines three main scenarios i.e. The worst case, most likely, and the best case. You will want a banker to understand these three scenarios clearly. You also have to be ready to discuss with a very detailed assumption you make in each of these scenarios.
Tip no. 3: Weigh the risks and benefits
If you want to get small business financing, you must start seeing something from the bank’s perspective. Banks see things in terms of risk and benefits. You must have a solid and decent plan that will mitigate risk. Bankers conduct risk analysis regardless of if you do it or not but are being prepared for that means you have a better chance to consider.
Tip no. 4: Two ways to be able to pay small business loans
Bankers always like small business borrowers that reveal primary and secondary payment sources. As a small business owner you are in the best position to determine all possible payment alternatives. However, you must discuss the option with your banker. Secondary payment sources include promised personal or business guarantees. The more convinced bankers are the higher your chances of getting a loan.