Getting a bank loan for your small business
Posted on 2014-05-26
Need a bank loan to launch your business idea off the ground?
One of the most common ways of raising finance for a small or medium business (otherwise known as an SME) is through a bank loan. Of course there are pros and cons to this, and you might prefer to souce an investor but, as long as you borrow sensibly and can manage the repayments with interest, the advantage is you don’t have to give up any equity in return for the money.
Apply these three winning tips to give yourself the best chance of turning that idea into funding...
Don’t use vague marketing terms
Even in the marketing realm this is a mistake, but it’s absolutely disastrous when you’re sitting down with your banker. The presentation or business plan you use must contain concrete, easy-to-understand language that makes business sense. So don’t say that your company is sure to succeed because you offer “best-of-breed services that take advantage of the low-hanging fruit in an exciting new industry”. Clearly explain why your services are so marketable and give concrete evidence to support this – your latest sales figures and realistic projections will mean far more than any marketing jargon.
Supply all your figures
Bankers work with numbers so that’s the language you need to speak. Prepare all your previous accounting, and transparently show the current financial state of your business. Remember that your banker is looking for assurance that you can afford to service the loan and that your business is viable enough to provide sufficient security.
Have a repayment plan
You need to show exactly how and when you will pay back the loan. It’s no good trying to convince the banker that you'll be able to pay back the loan in good time if you can’t show how you intend to do this. Once again, this means presenting a credible set of accounts and projections that allows the banker to clearly see it.
