Securing a loan for a start-up is no easy task. To improve your chances of getting a loan for your new venture, consider the following tips:
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Provide Previous Industry & Management Experience
In the eyes of the lender, your prior experience in your niche industry can influence how successful your new venture will be in future.
In the case of a Small Business Administration (SBA) loan or a normal bank loan, the lender will most probably want you to have at least three years of industry or management experience. For instance, if you are planning to open a hair salon, it would really come in handy if you were a professional salonist with several years of experience. Many people starting up a new company struggle to meet the stringent criteria required by a bank, there is an easy way to lend money to get you on your way. Auto title loans for older cars are becoming an increasingly popular way of borrowing money.
General business management experience is also key. Certain skills needed in running a business-like marketing, accounting and employee recruitment are really important and influence the future prospects of your new business.
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Have a Comprehensive Business Plan
A business plan is extremely necessary when applying for a loan for a new business. A comprehensive business plan should always include the following crucial details:
– Ownership and Management information: This includes information about you (the owner), your qualifications, experience as well as those of your management team.
– Company Overview: This should include the description of the service or product your company deals in.
– Market Analysis: This is an analysis of the general state of the market your service or product is found in and what makes your company to stand out.
– Marketing Strategy: This should detail how you plan to market your product or service to consumers.
– Financial Projections: Give detailed and well-supported analysis of how you see your business performing in the next 3 to 5 years.
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Save Up Personal Capital
It is always advisable to have some money saved up before starting a new business.
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Boost Your Personal Credit Score
Since a new business doesn’t have a credit history, your own personal credit score plays a huge role in determining whether you qualify for start-up financing and also how much interest you will have to pay for the loan you get. You should take necessary steps to improve your credit rating before applying for a start-up loan. Some of the things you can do to improve your credit score include:
– Fix errors in your credit report
– Pay off outstanding loans and credit card debt
– Pay bills on time
- Start Building Your Business Credit Score
Immediately you set up your new business, it is your responsibility to start building a healthy credit rating for it. You can continually boost your business’s credit score by doing the following:
– Identify supplies who give bad credit reports to credit bureaus
– Get a business credit card
– Open a separate business account
– Apply for a DUNS number to get a business credit file
– Secure all necessary permits and licenses needed to run your business
Bottom Line
Securing a loan for a start-up may seem difficult but if you follow the above tips, everything should go smoothly.
