Let’s face it - this is not a good time to be seeking small business loans from traditional lenders.
According to a recent survey by the National Federation of Independent Business, only a third of small business owners in the States were able to obtain the credit they needed. Things are equally difficult this side of the pond.
So what are the issues and pitfalls facing you when you apply for business finance?
First, your credit history will be paramount. Many of us have a few minor blips in our past, but any serious problems could prove fatal when seeking a small business loan.
Equally importantly, lenders will want to see that you have a steady and favourable cash flow, as this is a key indicator of the health of your business. The amount of collateral you can offer against the business loan will also be crucial, with secured lending generally offering more favourable interest rates than unsecured loans.
Looking at the longer term, traditional lenders will wish to see that you have a realistic yet visionary business plan, which should be fully and carefully costed. Many small business owners fail to articulate a clear strategy for the future, and this can be a considerable red flag for lenders of small business loans.
Your business plan should be coupled with detailed financial projections, reflecting the reality that the growth of your business may be steady and incremental rather than sudden and spectacular.
And of course, it’s absolutely essential that you have all the paperwork you need for your loan application on hand and in good order.
If lenders wish to see bank statements, tax and VAT returns, receipts and so on, and you don’t have them, they may well conclude that you operate your business in a disorganised way, causing them to take a step back.
Let’s also take a step back ourselves. This may not be the best time to pursue small business financing from banks, but why would you need it in the first place?
First and foremost, you may wish to improve your working capital, particularly if you have clients who take a leisurely approach to paying. Alternatively, you may be experiencing a period of growth, requiring you to invest in new equipment, vehicles or stock.
In short, finding the right source of small business loans can mean the difference between success and failure.
So what should you do when banks are reticent to lend?
Banks are a key ally for any growing business, but when they can’t help Cashsolv often can. Small business loans in the form of short-term finance for developing businesses is our speciality, and we offer a range of solutions – from emergency business loans through asset-based finance through to invoice finance.
Emergency loans, as the name suggests, are intended to cover an unexpected bill or a lacuna in your cash flow. Because speed is of the essence, we fund these small business loans ourselves, and provided you meet our requirements the funds can be in your account inside 24 hours.
In contrast, asset-based finance is secured on your existing plant and equipment and funded via a panel of external lenders – this allows us to obtain the best possible interest rate and ensure we can meet your needs if a particular lender is wary of your business sector.
Our small business loans calculator is completely transparent, uncomplicated and loans are easy to apply for.
There is also a smart and more permanent way of taming a troublesome cash flow: invoice factoring or discounting. Available solely to business-to-business companies, invoice factoring enables you to borrow 85% of the value of your invoices as soon as you issue them.
Meanwhile, we’ll take control of your debtor ledger, using our credit management skills to secure rapid payment and reduce the interest you pay.
Opt for invoice discounting and you get the same instant small business loan but maintain control of your own ledger and manage your own credit control.
This approach is cheaper as it involves less work for us, and it also means that your clients do not find themselves dealing with a third party. However, your credit control procedures may not be as rigorous as ours so you may find yourself paying more interest – the choice has to be yours.
So if you are in need of small business loans in a hurry take a look at our online application form to start the process and the finance could be in your account within 24 hours.
For further information Download our Guidance Paper on 'How small business loans can help your business finance problems'.
Schedule a quick and confidential, no obligation call with one of our experts to see how our solutions could help your business.
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