5 Tips For Getting Your Loan Approved
These days, smart entrepreneurs and small business owners are avoiding futile trips to the bank to apply for loans. Instead, they are seeking alternative loan solutions that skip time-consuming bank applications and provide a higher chance of approval to fund their financing needs.
If you are new to this arena, the process of hunting an alternative loan can be daunting. With so many alternative lenders, concerns about legitimacy and confusion about criteria and requirements, it’s hard not to be overwhelmed. The Finimpact solution was set up to help small businesses cut through the information clutter, identify appropriate, alternative lending options based on an applicant’s specific criteria and significantly increase an applicant’s chance of getting their loan request accepted.
Finimpact covers multiple financial solutions, including secured loans, unsecured loans, asset based finance, trade finance, property finance, invoice finance, merchant cash advance, equity crowdfunding, peer-to peer lending, and start-up loans. After working with multiple funding solutions and matching hundreds of small business owners with lenders, we have identified FIVE ESSENTIAL CRITERIA to improve your chance of getting a loan:
1. The Age of Your Business
This includes how long you are in business in your current legal structure ie. limited company or sole trader etc. and how long your current business accounts are open. Some of the lenders have a minimum timeframe criteria which will impact the loan amount you’ll be able to obtain.
2. Your Revenue
Your annual income amount, stability, and type of income may all be considered as it gives lenders a good indication of your ability to successfully repay a loan. In general, a more robust operating cash flow will ensure a company survives during a slower market period. These are usually key indicators of a healthy business model.
3. Your Loans History
This includes outstanding debt plus the track record you’ve established while managing credit and making payments over time.
4. The Purpose of the Loan
In the world of lending there are good and bad reasons to apply for a loan. A good reason may be financing a piece of equipment, real estate, long term software development or large seasonal sales variances. Bad reasons include financing ongoing losses, office build outs, or acquiring non-essential business assets. Other factors, such as environmental and economic conditions, may also be considered.
5. The Size of the Loan
As a rule of thumb, only apply for the amount you really require. If you ask for too much, lenders will question your credibility. Having said that, don’t underestimate the amount you need either since you want to make sure you have enough working cash flow. It goes without saying, you should also only ever take out a loan if you’re sure you can afford it. The lender needs to see your ability to pay it off within a reasonable timeframe.
Finally, when applying for a loan, keep in mind, every alternative lender has their own priorities and preferences for applicants. The same goes for the applicant — make sure you understand clearly the lender’s paying terms and conditions once you have identified a possible lending option.
That’s it! You are on your way to getting finance for your business!