Today, many businesses can be set up with little to no start-up capital involved. For entrepreneurs on a budget, this can be a great alternative to getting a business loan. However, in certain industries and for many start-ups today, it’s still essential to have money to invest into the company from the get-go. For many new entrepreneurs, this money will come in the form of a business loan. However, getting a loan to help fund your new business isn’t always easy. We’ve listed some top tips to help you improve your chances of getting the funding that you need.
1. Shop Around
When it comes to getting business funding, there’s no need to put all of your eggs in one basket. Perhaps you borrowed your mortgage and credit card from the same bank that you’ve got your bank account with, and naturally have applied to borrow a business loan from there. However, limiting your options is a bad idea in the long run. You can use online tools to explore the various business loans and lenders on offer, making it easier to find one that suits you best.
2. Improve Your Credit Score
If you have a poor personal credit score, then the chances of you being trusted with a business loan are very slim. Although there are certain ways around this, for example by getting a guarantor loan, a poor credit rating can certainly limit your lending options. Before applying for business funding, improve your personal credit score by paying off as many debts as you can and ensuring that all repayments are up to date.
3. Have a Business Plan
If you are applying for a bank loan in particular in order to fund your business, then it’s more crucial than ever for you to have a well laid out, solid business plan. Lenders will look at your business plan and use it in order to determine the level of risk that they believe you will pose if they were to offer you a sum. The better your business plan and the more thought you have put into it, the lower risk you will be perceived to be.
4. Consider Alternatives
Today, there are many alternatives to borrowing a loan from the bank or a business lender. Instead, you might want to think about crowdfunding, for example, when you ask members of the public to donate some money towards your start-up capital, often in exchange for shares in the company. This can be an excellent way to quickly gain funding for your new business without having to worry about paying it back. You might also want to think about pitching your ideas to investors who may be interested enough to invest their money into your company.
5. Perfect Your Pitch
Depending on the type of lenders that you are planning to ask for funding, you may be required to pitch your business idea, either in person or digitally. Pitching skills are essential as a business owner, as you will need to be able to confidently put your ideas across and get other people just as excited about them as you are. If you are anxious about public speaking and pitching, meditation or deep breathing exercises can help. There are many tutorials and guided exercises available online to help you improve this skill.
Anybody can start a business, but it’s definitely not as easy for everybody to get business funding. If you’re in need of funds to get your start-up off the ground, these are just some of the best ways to improve your chances of getting what you need.