However, given the economic downturn, most lenders are now more reluctant to lend, especially to startup businesses that don’t have prior credit records with them. Even if they do get them, startups are more often than not given loans at very high interest rates.
But according to Henry Go, a management and finance consultant with HiSYNG Business and Financial Consultancy, most entrepreneurs can avail of loans with good terms, provided they can impress their lenders.
1. Know your business
This will immediately give comfort to the lender, for they will know that they are dealing with a serious borrower.
2. Be ready to submit
A consultant can usually provide the necessary inputs for putting up a credible business plan and come up with the number that best suits your requirements.
4. Do your research
If you decide to go through the borrowing process without a consultant, then scout around to find out which loan options and which banks best suit your needs.
Anticipate the questions a lender may pose and have honest, well-researched answers ready. Decisions to lend are fact-based – don’t be idealistic when answering questions and providing projections.
6. Show sincerity
Given the tight credit market, managing risk is increasingly important for lenders. With this in mind, consider providing ample collateral toward your venture if possible. Your willingness to invest in your business – and in your success – reflects your own confidence in your plan.
7. Preparation before meeting with your lender is key
The time and commitment you dedicate in advance may help increase your appeal as a solid loan candidate in this competitive market.
8. Treat your lender as a business partner
You need to disclose everything about your company to your potential lender. Full disclosure about your financial position is essential in building an excellent reputation with the lender.
9. Impress with a good reputation
Stay loyal to your lender. Keep giving them business and good projects and good deals. In other words, you can improve your relationship with lenders by also bringing them business.