You don’t have to face a future of rejections.
Startup loans provide an essential resource for anyone looking to get a business off the ground. However, they can be difficult to arrange with lenders, especially if your company is brand new. If you’re trying to improve your success rate with startup loan applications then there are some simple steps to follow to help you find a loan that’s right for your business.
Look at your own credit history first
For a new business with very little financial history, lenders will usually look to the applicant’s own credit history. So, if your credit score is currently low or you haven’t taken the time to establish whether you have a good credit score or not this could be a factor that is holding you back from startup loan success. Go through your credit report to check for mistakes and ensure that it’s not still linked to exes or former partners or housemates with bad credit history. You may need to wait a while to improve your credit score before applying again but that will give you a much wider choice of options than just a bad credit loan.
Make sure you have a sound business plan
It’s difficult enough to convince a lender to take a chance on a new business but almost impossible if you don’t have a plan. Before you start making applications for startup loans, look at your business plan and make sure that it’s convincing. You’ll need to ensure that you have a sound proposition for the business – a credible USP, market research that identifies a need for your products or services and a potential customer base. It will also be crucial to show that your figures add up – where are you getting your financial projections from and why do you think that they’re going to work out like that?
Be able to show that you’ve taken advice
Professional advisors have a lot to offer new entrepreneurs – and their advice can also have a part to play in convincing a lender to approve a loan. From accountants through to industry specific advisors and business mentors, if you can show that you’ve had input from the experts at essential moments then this will give your business more credibility with potential lenders.
Review your cashflow
If you’re repeatedly being rejected for a startup loan then this could be the result of poor cashflow. For any new business, cashflow is difficult to negotiate. Lenders need to see evidence of cashflow that can be used to repay the loan but new businesses need loans to start generating cashflow. Do everything that you can to start generating cashflow for your business, even if you’re completely bootstrapped at first. Borrowing from friends and family could help to cover key initial costs that could enable you to generate just enough cashflow to convince a lender to approve your application. If you really can’t generate any cashflow without a loan then make sure that your cashflow projections are convincing, accurate and based on factors that will make sense to the lender reviewing your application.