Being in the business, you are more likely to encounter numerous numbers of ‘No’ that you can imagine. Whether you are looking for a potential consumer or maybe funding for your business, situations are countless where you can be told ‘No’ and this may not be good for your business. This, however, builds resilience and the spirit of not giving. The main area we are going to discuss is in dealing with lenders. How can you turn the ‘No’ into a ‘Yes’ when seeking financing for your business?
For you to increase your chances of getting a ‘Yes’ instead of a ‘No’ from a lender, you need to do the following before and when applying for the loan.
Choose the right lender and the right loan
Getting your loan application approved begins before the application process starts. It starts with the choice of the lender to borrow from. As a small business owner, you need to do research on the various lenders in the market in order to find out which of them can best serve you as far as their loan requirements and terms are concerned.
Traditional banks, for example, have stringent requirements and terms, and this is unfavorable for you as a small business owner or if you want to start a new business. Luckily, there are online lenders who provide a wide range of business loans with probably the least restrictions. These are the saviors of small business owners who need financing but do not meet the strict requirements of the traditional banks. More so, the online lenders disburse their loans much faster hence are also favorable when you are in need of quick loans.
Apart from the lender, you should also choose the right loan for your business depending on your financial need. Do your research and make a good choice. This will definitely help you turn a ‘No’ into a ‘Yes’ from a lender.
Building a good credit history
A good credit history is one of the vital requirements in order to access a business loan. This will give the lender an assurance that you will repay the loan because you have done it before. Some lenders are strict on credit history, especially for traditional banks. However, some online lenders are likely to provide bad credit business loans for people who deserve a second chance. But all in all, you need a good credit history to turn a lender’s ‘No’ into a ‘Yes’.
How do you build a good credit history? You can do this by repaying your loans on time and clearing them. Delays in repaying loans will make you have bad credit. This should also be extended to your personal finances. Sometimes the lender may need your financial records and credit score before giving you your business loan. Under such circumstances, having a good personal credit score will help you. You should, therefore, build your personal good credit score as well.
Having a business plan
A business plan which is well prepared gives the lenders confidence in you which you so much need to get a loan. Lack of it is almost an automatic no to your loan request. For you to increase your chances of your loan being approved, work on your business plan to make it clear and professional. The lender would like to see how you will repay the loan, and what better way than seeing it through your clearly articulated business plan? The business plan will show profit projections for the next year or so.
Having a good cash flow
Cash flow is a crucial determining factor when you apply for a business loan. Even if you have met all the requirements and you are lacking cash flow, you are most likely to be denied a loan. This is because cash flow will determine whether you will have the money to repay the loan or not.
Having a good cash flow means that you can comfortably pay your business expenses like employees, inventory and all other operating costs, repay the monthly loan installments, and still remain with some cash. This will give the lender the assurance he/she needs, and your loan will most likely be approved.
Having a collateral
Lenders will like some assurance that in case, unfortunately, your business does not turn out to be profitable as earlier anticipated when taking the loan, he/she will get the money back. This is why some loan options need collateral. Collateral is a property which is not related to your business which you give to the lender as a security for the loan you are borrowing. It can be a house, car, piece of land, and so on, as long as it is accepted by the lender. In case you default the loan for some reason or another, the lender will recoup it from selling off the collateral. Therefore, for you to get your loan approved, you must check whether the loan applied for needs a collateral and if yes, provide its details.
All the above may be adhered to, but you still need to develop a good personal relationship with your preferred lender.