4 Things You Need to Consider Before Applying for a Small Business Loan

Today, it’s easier than ever to start your new business with little to no start-up capital. Thanks to the rise of online companies, there’s less of a need to borrow thousands of dollars in order to get your business idea off the ground. However, that isn’t to say that getting the additional funding won’t help!

In many industries and for lots of start-ups, having a certain amount of cash available to invest in the business from the start is absolutely necessary. For many start-ups, this money will be in the form of a business loan from the bank, although it’s worth noting that the lending market is becoming increasingly more diverse, with alternative options growing in popularity. We’ve put together a checklist of the main things that you should consider before you apply for a business loan.

types of loans - business loan in Norway

#1. Shop Around:

There’s no need to put all of your eggs in the same basket when it comes to getting a business loan. Maybe you’re naturally inclined to turn to the same lender that you go to for personal finance, but it’s worth keeping in mind that this isn’t always the best idea. In the long run, limiting your options can actually hold you back and prevent you from getting the funding that you need. By all means, apply to the bank, but be sure that you’ve researched alternative options too. For example, if you need help finding a suitable lender, a small business lending marketplace could be a great way to get started.

#2. Improve Your Credit Score:

For aspiring business owners with a poor personal credit score, the bad news is that the chances of being trusted with small business loans become slimmer. Although you may be able to find some ways around getting rejected, such as applying for a guarantor loan, a poor credit rating can leave you with very limited lending options. Before you go ahead and apply for business funding, it’s a wise idea to look into your credit score so that you have a better idea of where you stand. You can then go ahead and improve it by paying off any debts, making sure that your personal details are up to date, and setting up regular payments.

#3. Have a Business Plan:

No matter what kind of funding you are applying for when growing or starting your business, having a well laid out, the solid business plan is essential. Lenders will look over your business plan and use it to determine the level of risk that they believe you will pose to them when offering you a certain amount. The better your business plan and the more concrete your future plans are, the less of a risk you will likely be perceived to be. From a lender’s point of view, an aspiring entrepreneur who has taken the time to really put a lot of thought and effort into their business plan is more likely to be a careful, vigilant business owner in the future.

Business is all about making wise choices that will help you achieve your goals in life. Gordon Simmons Service Credit Union is an excellent example of how to build and take your business to new heights, read all about his accomplishments here.

#4. Perfect Your Pitch:

It’s likely that you’ll need to pitch your business idea to the bank or lender at some point, either in personal or digitally. As a business owner, you’ll quickly find that pitching skills are essential. You will need to be able to confidently put your ideas across to other people and get them just as excited and motivated as you are. Meditation, deep breathing exercises, and positive visualizations can be very useful if you’re feeling nervous about pitching your ideas to a panel of lenders for the first time.

If these tips helped, let us know!

Dragan Sutevski

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan