5 Exclusive Tips to Secure a Commercial Loan
These days, you have many options when it comes to taking out commercial business loans. From traditional institutions to alternative lenders, there are many choices of loans to choose according to your requirements. However, it is important to keep in mind that your loan application will need to meet several important criteria in order to be approved.
If you want to secure a commercial business loan, there are some steps you can take to increase your chances of success.
- Make a detailed and realistic business plan
First and foremost, in order to apply for a business loan, you will need to create a persuasive and well-crafted business plan to present to your potential lenders. If you don’t have the time or the expertise to create one, it is best to opt for professional services, such as the help of a professional business advisor. A comprehensive and solid business plan covers important details including your financial goals, liabilities, assets, cost-related accounts, your business expansion strategies, specific needs for a loan and other relevant factors for lenders to consider. Creating a persuasive and accurate business plan will increase your chances of getting approved for a business loan.
- Prepare your financial paperwork
With the exception of cash flow lending, which requires almost no financial paperwork, before approving your loan, the lender may need to evaluate your financial documents. Some of the financial documents that your potential lender could request include profit and loss statements, a list of your assets and liabilities, income tax returns, BAS statements and other tax-related documents, existing loan documents if any, and past revenue reports. Therefore, you should prepare these documents ahead of time to show to the lender if asked.
- Start preparing your application early
When it comes to preparing your application for your loan, it is best to start early. The process to approve your commercial business loan application can be lengthy, and it is best to act in advance to increase your likelihood of gaining access to funds when you need them.
- Be realistic about meeting repayment requirements
Overestimating your ability to make timely repayments can result in larger incurred costs and other serious consequences later on. Therefore, it is essential to make realistic predictions about your repayments. To make accurate projections about meeting the requirements of your repayment schedule, it is best to consult a professional. Engaging a professional accountant or a business advisor will evaluate your business needs, help you calculate the amount you need and decide whether you will be able to make timely repayments. If you will not be able to meet these requirements, your financial advisor may ask you to reconsider your loan amount or to revisit your business goals.
- Shop around
Before you choose your lender, make sure to do your research and review as many lenders as possible to get the best deal for your business loan. Don’t get disappointed if some lenders turn your application down due to their own specific criteria. To get the most competitive loan, compare loan options from multiple lenders and then choose the best option that suits your specific business needs.
Wrapping It Up
Follow the steps outlined in this article to maximise your chances of securing commercial business loans. If you are a new business owner and are not sure which lending product would best suit your needs, it is recommended to consult a professional, such as a business or financial advisor, who will help you secure the best deal.
