There is a false belief that banks do not give small-business loans. While banks are shrewd, they do not reject loan applications of loans because of the size of the organization seeking that loan. Owners of small business can get loans from banks if they take the following measures.
Know the Right Bank to get Loans
This is the first and major step towards getting a loan. Unfortunately, this is the stage where owners of most small businesses get it wrong. Most business owners only source loans from commercial banks. Unless your convincing skills are top-notch, getting loans from commercial banks to fund your small business is unlikely.
Instead of commercial banks, try Development Banks, Agricultural Banks, Microfinance Banks and other banks that are more likely to give loans to small businesses. These banks are created for the purpose of enabling development and innovation. Their loan conditions will also be far more lenient than commercial banks. They are not overly focused on profits, unlike commercial banks.
Ensure Your Business has a Good Reputation and Portfolio
Sometimes, the faults are from the business owners. Banks do not “gift” out loans to business owners. Owners of small businesses often ignore the importance of a good reputation or portfolio. Banks will likely reject your loan approval if your business does not seem able to repay such loans.
The reputation of your business is not critical for getting a loan. It is equally important for sustaining your business. Your business will most likely collapse if it is popular for not keeping to its promises. A portfolio (account) is equally important for your business. It shows how well is performing.
Have Your Accounts Ready
Speaking of portfolios or accounts, most small businesses tend to ignore its importance. Most small businesses are contented simply because they are able to make profits, pay the salaries of their workers and keep the business afloat. The few small businesses that keep accounts do not pay much attention to detail. Most of them use the overhead approach and just compare income to expenses.
Accounts or portfolios developed using this approach does hurt your chances of getting a loan. You are not the only business owner applying for loans. It is important to constantly keep records of accounts. Research has shown that small businesses that maintain a good account are more likely to get loans than those who hurriedly put it together for the purpose of a loan. Paying attention to details in your accounts can be the edge, you have over other applicants. Why not utilize it properly?
Flaunt Your Knowledge and Expertise in Your Application
With all these other factors in place, what is left is the actual loan application. One way to boost your chances of getting the loan is to show off. At the third point, showing off will do you more good than harm. Do not hesitate to flaunt your knowledge and expertise of your industry while applying for a loan.
In your application, outline the challenges facing the society and how it relates to your industry. Then explain how your business can help tackle these challenges. You can even show details on how you intend to use the loan to enable your business to tackle these challenges. Your application should be convincing. So don’t hesitate to sell yourself properly.