Money is the fundamental source of any business. In business, we often face financial challenges. Especially when it comes to small and medium businesses, securing finances often become difficult.
Acquiring a loan is usually identified with stress and is considered to be a cumbersome process. However, if you have the right knowledge and assistance, getting a loan is as easy as a pie. Following are six easy steps to be followed for getting a business loan:
1. Create a business plan: A well-made business plan increases your chances of getting a loan at ease. You should have a thorough understanding of the company, product, market and financials. The plan should include situational analysis, market strategies, competitive analysis, target audience, management structure and revenue models. The sequence can be as follows:
a) Executive Summary
b) Company Overview
c) Products and Services
d) Target audience
e) Marketing strategies and sales plan
f) Milestones and metrics
g) Management Team
h) Financial and Revenue Models
2. Seek expert advice: Sometimes securing advice from a financial expert can help you avoid blunders. If you do not have much experience in the industry, try taking some professional help. With the business plan in hand, the financial advisor can help you decide on the amount and type of loan you need and could also suggest potential lenders.
3. Decide on the amount of loan to be acquired: The next crucial step is to decide, how much money the company needs. By doing a thorough research and making accurate projections, you can settle on a budget. You also have to decide on, whether you want to go for a one-time loan or take it in intervals.
4. Type of loan you need: The kind of loan you need will depend on the objective behind applying for a business loan:
a) To manage your operating expenses: The task of managing your day-to-day expenses includes payrolls, transportation, inventory, administration, rent, repair, employee benefits, etc. In such a case, you can acquire a short term cash flow loan. These can be repaid over a short period. Another option is a line of credit. It allows you to borrow and repay only the money you need at the moment.
b) To grow your business: If you are in the growth phase of your business where you are looking for new opportunities, you can go for a Term Loan. In this type of loan, you get a lump sum amount that requires fixed payments.
c) To be prepared for emergencies: If you have a good cash flow but are not geared up for emergencies, you can apply for a line of credit or term loan with the lowest interest rate.
5. Identify and Build Relationship with the lender: Once you have made the business plan, decided on the amount and type of loan needed, the next step is to identify the possible sources of getting a business loan. Prepare a list of potential lenders; select the one that can best fulfil your business needs. Having good relations with the lender is critical. Paying your instalments on time will fetch you an advantage of getting loans, readily in the future.
6. Put your financial documents in place: Do not fiddle with the documents at the last moment; you should have them in place to make your work quick and easy. Financial documents include your application form, self-attested copy of identity proof, bank statements, ownership structure and affiliations, certificate of doing a business and financials (audits, current year revenue, projections, income tax returns, etc.). Once you get your documents in place, you can complete your loan application.
We hope our 6 step guide to getting a business loan was helpful to you. If you’re looking to acquire a business loan, you can get in touch with experts from one of the leading financing companies in Jamaica.
We at WorldNet Investment Company Ltd., offer quick, simple, accommodative business loans and treat the client’s needs as our first priority. We exclusively support small and medium businesses, offer flexible payment options and provide business loans at a reasonable rate of interest.