5 Tips That Should Help You Negotiate And Successfully Secure A Business Loan
Capital is one of the most important requirements to start a business and keep it growing. Every business owner would at some point need to secure a loan. And securing a loan could be one of the hardest hurdles in running a business as you have to be prepared to bargain for the best offer from banks and loan companies.
Have you tried securing a business loan and it didn’t work? We’ve successfully compiled a detailed guide to help you negotiate and secure a business loan successfully below.
1. Have a Solid Business Plan:
Your business plan defines your goals and how you plan to meet these goals. To be able to secure a loan, you should have a well-detailed business plan that includes the purpose of your business, cash flow expectations, the target market, how you intend to use the loan to run your business, etc. Be ready to also give detailed information about the bank statements, business objectives, and credit reports. These questions help the lender know if you can run a business, and help them decide if you are a good choice for their loan facility.
2. Do Enough Research:
Be well informed about the company you’re seeking a loan from. This saves you time, and puts you in a better position to receive the loan. Also, you should check if you can meet up with their repayment terms. Determine if their terms are negotiable or not. This way you know if they are the ones for you financially.
3. Cash Flow:
As a business owner you should be able to provide your current cash flow and expected revenues not excluding important documents like personal and business insurance, bank statements, and any other licenses. It is important to discuss how much you’ve invested in the business and how much more you’ll contribute later on. This helps the lender know if you are capable of paying back the loan.
4. Security (Collateral) Agreement:
Most lenders ask for collateral to protect themselves in case there’s a crash or liquidation in the business and the business owner is unable to pay the loan. Before accepting the agreement, negotiate with the lenders and avoid using your personal assets as collateral. It is advisable to know the risk involved before agreeing.
5. Negotiate the Repayment Terms:
You should be able to negotiate for a better repayment schedule so that you can make use of your cash to add up to your bottom line. It is normal for lenders to ask for interests, a decrease in the interest will reduce the amount you’re paying. You should also have information about their payment penalties.
There is a huge competition for business loans, and you need to get prepared to beat the competition and secure a loan. Whatever you do, ensure you maintain a good credit rating, as this gives you a higher chance of successfully securing your loan.