Getting a Business Loan

Knowing you want a business loan is one thing – but how do you go about getting one? At Cashflow Solutions we have some top tips. 

1 – Maintain an Outstanding Credit History 

Part of getting a business loan is always going to be showing that you are a trustworthy company that pays its bills on time and the way to do that is to maintain a strong credit score. 

Just like your personal credit rating, your business credit history is a key component to achieving the loan you are after, so it’s essential that you take it seriously. 

Your credit history is the record of all your good financial sense mingled with all those unfortunate bad moments. Things that improve your business credit rating include: 

• Making payments on time – Whether that’s something as seemingly small as a company phone contract, or larger considerations such as maintaining your corporate mortgage, making sure that you pay everything on time is the first thing to do to build a strong credit score. 
• Don’t make too many applications – While a “soft check” on your company credit history won’t have any impact on your credit score, a thorough hard search on your business will. If you are always trying (and failing) to get loans, you are pushing yourself further down that road to untrustworthiness. Take a break from any credit applications for a few months and allow those wounds to heal. 
• Use a company credit card – It may sound counter intuitive, but if you want to get a loan, get a credit card first. By showing good financial sense in how you use the credit card and always making payments on time, you can build up your credit score. This is especially useful for new businesses who might be otherwise unknown to credit agencies. 
• Have a good personal credit history – It’s not just your business credit rating. If you are a company director then it’s important to keep your personal finances in as much good standing as your business ones. For sole traders and partnerships, this is even more the case as any business loan will be considered based on your personal credit rating. 

It’s important to remember that a non-existent credit history is just as damaging as a bad one, so don’t avoid getting your business on the credit map. 

2 – Utilise Your Business Assets 

If your business already has considerable assets, whether that’s in terms of equipment, vehicles, or even a company-owned building, asset-based lending will offer you a range of secured loan options that will have better rates and more favourable terms than unsecured alternatives. In this way, your business assets can work for you in helping you secure the funding you need. 

3 – Have a Strong Business Plan 

Documentation is key, and here it’s all about the business plan.

While startups are quite used to having their business plan ready to go for any loan application, businesses that have been trading for a while tend to forget about this important document. 

Your business plan should be considered a live document that is regularly updated and altered as necessary. By keeping it up-to-date, you show that you have a close eye on the business and understanding of its development.

Ensure that the accounting section of the plan is up to date, too, by undergoing annual forecasts that take into account how the business has changed as time goes on. 

4 – Develop a Project Proposal 

Think of a project proposal as a miniature business plan for a specific project. If you are looking to raise money for a new venture inside the business, or for expansion that’s focussed on a particular project, then a project proposal is as essential as the main business plan. 

This should follow all the same guidelines as a main business plan and include the financial forecasts that make your main plan so confident. 

5 – Have Your Accounts in Order 

It should go without saying that you need your business accounts to be as good as they can be, but this is often overlooked.

Go to your accountant and ask them to put together your business accounts with a loan in mind and they will provide the documentation you need. 

6 – Use a Broker 

There is a wide range of finance packages and products available for businesses and, unless you are in the financial loans sector yourself, no one expects you to know about all of them.

A broker, on the other hand, is a specialist who does this for a living – they are simply going to have a far better idea of what deals are available and what would work best for your business need. 

Many people are put off by the idea of a broker, believing that using one will cost them significantly in fees, but the opposite is true.

Business loan brokers are paid commission by the lender, and so don’t charge you for their services, instead finding you the best loan from all the options. 

7 – Shop Around 

If you are not wanting to use a broker, then it’s important you put the legwork in yourself. Don’t just go for the first loan that is available, but consider the terms of the loan and the interest rates on offer.

Be sure that the loan you are looking at is properly suited for your business and that you can comfortably make any repayments on it. 

8 – Consider Loan Alternatives 

There are other ways to get that injection of capital your business needs beyond a basic business loan. Specialist loans, grants, angel investment, asset funding, and crowdfunding are all possibilities that may work better for your business than a standard bank loan. 

At Cashflow Solutions we have a comprehensive library of articles to help you consider some of these many alternatives. 

9 – Take Care With Your Application 

Don’t rush into filling out that application form. Make sure that you have checked the terms of the loan thoroughly, have all your paperwork ready, and know all your details well before you sit down to fill in the form.

Loans that are poorly applied for can be rejected and have a negative impact on your credit rating, making subsequent applications less likely to succeed. 

10 – Use Cashflow Solutions 

Maybe this final tip is a little less biased than the others, but here at Cashflow Solutions, we are keen to help you get the loan you need for your business to thrive.

Our team are experts with comprehensive knowledge of a range of loans and will be able to find the financing you require. For the best advice and largest selection of financial products, contact us today.

Working in partnership with our lending partners backed by the British Business Bank to deploy funds to support business growth and working capital

• Our connections to funders are second to none.
• We will use our experience to select the right lender to approach on your behalf
• We conduct diligence on each application before it goes – we like to answer the lenders questions before they ask them.
• We will produce a short credit paper which will go alongside your application.
• We can produce the cashflow for you in a format that will be acceptable to the lender
• We will ensure that your application is supported by all the key documents needed – if you make it easy for the lender it will cut days off the process and increase your chances of approval.