Running your own business can be tough. Especially at the start when it feels like you are doing everything for yourself. Sometimes, either to launch your business or to take it to the next step, you require a cash injection. Ideally, in most cases, this would come in the form of an investor. However, sometimes that’s just not possible, or you may choose to avoid that option as you want to keep full control. The alternative is a bank loan.
Unfortunately, banks are still very reluctant to lend. Especially to someone running their own home business or working as a sole-trader, who has no guaranteed steady income. However, it’s by no means impossible. Here are some great tips to help you secure the loan you need to ensure your business can be a success.
One of the best ways to make sure you can get a loan is hiring a bookkeeper. They’ll help you to sort out your finances and make sure your accounts are well-presented and ordered. They can also give you some advice on what you need to do to present yourself well to banks and investors alike. They can prepare you a financial forecast and help with your business plan. Trusted bookkeeping services are a worthwhile investment, they make your life easier, and banks will like that a bookkeeper has looked at your finances, it means they can trust the information you are giving them.
Pay Off Debts
Banks generally aren’t as bothered about savings as they are debts. If you’ve got savings, great. But, if you’ve got debts,it’s a good idea to try to pay them off by finding ways to save money within your business. Having money in the bank means nothing if you’ve also got debt to pay back.
However, if you have got debts, don’t assume this means you can’t get a loan. As long as you are making payments on time, and can afford a further repayment, it’s still worth applying.
Take Your Time
Whatever you do, don’t just rush out and take the first loan that you see. This could be a huge mistake, both for you personally and your business. Take your time to look at your options. Compare interest rates, repayment dates and also find out if there is a fee for paying your loan off early.
Know Your Business
Going into a bank and asking for a loan without accurate figures or knowing your numbers is never a good idea. You are asking them to trust you with money; they want to see that you know what you are doing. A bookkeeper will help you to prepare your accounts, but you still need to understand them. You also need to know where you want to be in 5 years, and how you plan to get there. Basically, you need to know your business inside out.
These tips can also help anyone struggling to get a personal loan or mortgage because they are self-employed. The key is proving you can make repayments, and that you will be able to continue to do so in the long-term. You need to make the bank trust you.