While we all hope we have plenty of time to research and apply for business loans to aid our ventures, this isn’t always the case. Sometimes, circumstances dictate getting access to more funds in a hurry.
We might spot an excellent opportunity we need to jump on, have a massive influx of orders that we need more cash to cover to make or buy in, or have to replace an expensive piece of equipment, among other things.
If you find yourself having to get a business loan in a hurry, there are ways you can help yourself to improve your chances of it being approved. Here’s what to do when the time comes.
Keep All Your Paperwork Up to Date
When it comes to obtaining small business loans, one of the prime things you have to work on is getting all your paperwork up to date. Any lender will want to see data about your organization’s current financial standing and recent history before they consider saying yes to any application.
To ensure you’re ready to go, it’s best to keep updated on all paperwork monthly, so you’re not behind by a long way and need to get a lot of information organized when you decide it’s time for a loan. Most financial institutions ask to see things such as a cash flow statement, balance sheet, and profit and loss statement. They may also request access to your debtors’ reports, financial projections, and company tax returns from the last few years.
Many places will also ask to view your personal financial documentation if your business is still relatively new and doesn’t have much trading history. As a result, it’s best to have your own tax returns, plus your current list of assets and liabilities, ready to present if asked.
Have an Updated Business Plan
Most lenders will also want to see that you’ve put together a detailed business plan. This document covers how your business will/does bring in funds and other factors such as your competition, business structure, target market, and the strengths, weaknesses, opportunities and threats (SWOT) analysis for your venture.
A thorough business plan will also cover your marketing and sales ideas and efforts and how you visualize growing the business over the coming months or years. If you haven’t put together a business plan yet or haven’t updated yours for a while, you should work on that ASAP so you have a proper document to provide financial institutions if they ask to see it.
Research Lenders Thoroughly
To maximize your chances of loan success, submit loan applications to lenders who are more likely to say yes. Complete plenty of research into the potential financial institutions you can approach and whittle down your candidates to a more refined shortlist that best suits your business needs.
There’s no point wasting time and energy on applying for loans at companies that work with businesses that are at a different point from yours, for instance, when it comes to sales numbers, staff levels, profit percentages, or the like. Some companies only deal with firms in specific industries, too. As such, conduct enough research to tell which firms are more likely to say yes than no to your application.
Remember that you don’t have to only approach local lenders in your area, either. There are all sorts of different lending opportunities these days for businesses, including online-only firms. Read the details about how different lenders apply their rules and regulations to potential loan applicants and save your paperwork submissions for those most likely to be interested in what you do and how you go about it.
Be Clear on Your Reasons for the Loan
It’s also vital to get very clear in your mind about why you want to ask for loan funds in the first place. Before approving a cash injection, lenders will want to know that you have specific reasons for getting extra funding and that you will use it appropriately. You can’t just tell people that you want money to start a new business or to grow a current one; instead, financial institutions need to see how you’ll use cash specifically to achieve results and be able to pay back the loan over time.
Clarity on the purpose for the additional cash and ensuring you’re only applying for the minimum amount of funds you need rather than lots of extra money for no reason, will help lenders feel more secure to invest in your business. Provide details about how exactly you’ll use the funds if you receive them, such as buying a particular type of business, purchasing a necessary piece of equipment to scale up production, or using the money to build your team and significantly improve sales.
Show that you’ve carefully planned out your next move(s), and financial providers will have much more confidence in you and your firm.
Follow all these tips when applying for a business loan in 2023, and you’re much more likely to get the “yes” you’re waiting on sooner, so you can sign on the dotted line ASAP and receive your cash injection when you need it.
