Starting and running a business is a challenge that very few take upon themselves. It’s quite admirable how entrepreneurs face operational difficulties, how they stick to their small business during the low season and how they try to even out the playing field.
Also, there’s the issue that running a small business may require money, either to remove hurdles it’s facing, to increase operational capital, or for further investments. But you don’t have to do it alone.
Getting a small business loan might exactly what you were looking for. Partnering up with a lender will help your business grow and thrive. And with the loan, you can make the changes you need to become successful.
How to secure small business financing
The first step towards securing a business loan is identifying why you need it. Let’s look at an example that will help us understand how to secure small business financing.
Suzanne is the owner of one of the best grocery shops in her neighborhood. Her love and passion for fresh vegetables has seen her business grow. However, she is receiving more and more orders with each passing day.
This would be great news, except… transportation costs are very high, and she does not have the capital to provide for the demand.
As a professional, she continuously analyses her business’ condition and already sees the risk of failing to supply to the new customers. Her savings are not enough to cover the costs, and the business is not making an adequate profit to plow back. She comes to the conclusion that she needs external funding to expand the business and acquire more supplies to fit the demand.
What she needs is a small business loan. After realizing this, she sits down and estimates how much she needs from the potential lenders. She needs the money to:
After identifying these, she goes ahead and examines her options. Since she has no form of collateral to offer traditional financial institutions and has only been running the business for less than two years, she sticks to applying for a small business loan.
Since she was not a finance expert, she got an accountant to help her manage the loan. She gave her a business plan, and the accountant developed a budget. Together, they assessed and reviewed the budget and made sure it could help Suzanne’s store.
Finding the right lender
Suzanne’s most significant task was finding a suitable lender to finance her loan. She compared different lenders by looking at the differences in their:
All these gave her an idea of how much the business could take in terms of payments in a single month without depleting operational income. They also helped her choose her best option. She selected decided to apply with a local online lender.
She was granted the loan she needed to expand her operations.
Financing can help your business grow
Suzzane decided to take a chance and reap its benefits. After getting a loan and investing it, she was able to increase her sales and her profits.
Her grocery store is growing at a fast rate. She is meeting her loan repayments each month, the business is making a profit, and the store has grown into a mini-supermarket.
Many business owners are scared of getting a loan and being in debt to a bank, but taking the risk can mean more profit. Find the right lender, the one that fits your needs, and get that loan your business needs!Updated Date: 15 January 2020, 05:51