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How to get the best loan for your business

Securing the best loan for your business means taking advantage of your business start up’s potential to get the best loan on terms that are favorable to you.

There are plenty of ways to secure funding for a business startup, including government funding and angel investors. However, getting a business loan is still the preferred method of raising money for new companies. But finding the best loan for your business is only part of the struggle. You will have to ensure that your business is in the best possible position and take advantage of its assets and performance to get a bigger loan on better terms.

How to find a loan for your business

Regardless of if you are looking to obtain a loan from a high street bank or a personal loan for business from an organization such as Lending Bee, securing a loan within the first two years of trading means that you have to fully exploit your trading performance to date to assure the lender that you are an excellent investment.

1. Maximize on capital investment

According to Katong Credit, a licensed moneylender in Singapore, your business will begin to acquire capital as it grows – this can be from other investors or your personal finances. You need to make the most of this – investors will be more assured if you have raised funds from others or put in your own money into your new business.

2. Show a healthy cash flow

After your business has been in operation for a year, you can show viable investors your cash flow when the time comes to apply for a business loan. Building societies and banks alike will want to see proof of steady cash flow. This will help to assure them that your business will be able to meet loan repayments. Come up with a three-year cash flow forecast (how you predict your enterprise will perform over the course of the next 36 months) to assure the lender that your business is in a capable position to repay the loan.

3. Provide your business’ collateral

Even though an unsecured loan is ideal for a small business, it is often limited to smaller loan amounts than a secured loan. Unsecured loans, for example,  being able to borrow a maximum of $25,000, are suitable for new businesses that are just getting started or are in their early years of operation.

Various lenders might be reluctant to offer you a secured loan. If this is the case, then you can provide collateral to secure the loan against. This can include your business premises if you own them, or assets such as plant machinery, which can make any lender be willing to provide a secured loan.

4. Showcase your industry knowledge

Your business start-up is operating in an aggressive market and against a backdrop of government and legal policies. Lenders will be more assured if you are able to demonstrate that you have an understanding of what is going on in your industry, the emerging trends, and possible market threats and opportunities that are likely to affect your business. Do a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of your business, and keep up to date with market trends so that you can show off your knowledge.

5. Get character references

How you present yourself and demonstrate confidence in your ability to expand your business can greatly influence your chances of securing a larger business loan. Establish a positive image of yourself as the owner of the business, for example, receiving endorsements from individuals who you have done business with in the past.

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