Getting a business up and running can feel uncertain, but with hard work and dedication, it’s a risk that can pay off in the long run. You’ll also need the financial support of an expert partner. Whether you’re diving into full-time entrepreneurship, testing the waters with a side hustle, or looking to expand your existing business, you might need to get a business loan to get started.
 

5 tips to help you secure business finance

1. If you’re a new business, a solid business plan can help

A bank won’t approve your business loan unless you can prove that you’re going to be able to pay it back – so your bank will need evidence that your business is likely to be profitable. When you apply for financing, the bank examines your credit history, your business's past performance (where applicable), and your financial projections, to ensure that you can repay the loan. They also consider economic factors that may affect your business and their own risk tolerance for your industry and loan type. If your request doesn't fit their standard policies, the review may take longer, and the offer might be less favourable.

A business plan can help explain how you plan to make your business a success. You’ll need to include market research and evidence that there will be a demand for your product or service. Make sure that your business plan includes the following:

• Company details: These include the company name, what your business is about, details about your product or service, the problem that it is going to solve, and your company’s values and mission.
  
  
• Strategy: This will outline how you plan to market your business and attract customers.
  
  
• Finances: These should show projected sales forecasts, expenses, and profit estimates. They need to be backed up with research that justifies the projected estimates.
  
  
• Market research: This research must show that there’s a place for your business and a gap for you to make a profit. List your target market, competitors, and any problems you have identified in the market.

There are numerous resources online, both free and for sale, that can help you put together a great business plan. Some, like SimplyBiz, even provide templates so that you know exactly how to structure the document.

2. Provide collateral

Collateral refers to an asset or assets that you put up as security against your loan. It could include property, stocks, bonds, vehicles, or even business equipment. Attaching it to the loan as collateral means that if you can’t keep up the loan payments, the bank can sell the asset to recover the loan.

Ideally, your collateral should therefore be something that the bank can convert to cash if they need to – this is referred to as liquidity. Before finalising a loan, your bank will assess the value of any assets being used as collateral, to ensure that they cover the value of the loan. If you attach an asset to a loan as collateral, remember that you are responsible for maintaining that asset and informing your bank of any changes that could affect its value.

3. Work on your credit score

Your credit score is a measure of your level of risk as a borrower. The higher your score, the higher your chances of securing a loan. Higher credit scores may enable your bank to offer you lower interest rates as well.

If your credit score is low, focus on boosting it before applying for a loan. This could involve paying off some existing debt, staying current with payments and avoiding new debt. Monitoring your credit score regularly and managing your debt to maintain a healthy credit score ensures that you’re better positioned for future loan applications.

4. Create a business portfolio

If you’re applying for a loan to expand your existing business operations, developing a business portfolio is essential. This portfolio should demonstrate the profitability of your business over time, showing lenders that you have a successful venture ready for growth that just needs the right financial boost.

Your portfolio doesn’t need to be overly complex. A straightforward record of income, expenses and profits from recent years will be enough to present you as a strong candidate for a loan.

5. Complete the business loan application accurately

Accurately completing the business loan application may seem obvious, but it’s easy to overlook details like attaching necessary documents or signing all the forms involved. Overlooking details like these could increase the time taken to process your application.

Business loan applications differ from personal ones, and the process varies for each business. To avoid having your loan denied over a technicality, ensure that you apply for the right type of business loan tailored to your requirements.

If you need to know more, consult one of our bankers to assess the individual needs of your business thoroughly and determine the most appropriate loan type and application procedure. Professional guidance from the start will help to make your application process seamless.