Acquiring a loan is often a necessity to a growing or start-up business to finance their needs. It would seem that getting a loan is straightforward, however, being granted the loan doesn’t automatically mean that you have obtained the ideal mortgage for you and your business. To help you secure the right loan, here are some tips that would help you achieve the best results.
Tip 1: Write a solid business plan It is essential for any business to have a plan in order to be successful. It keeps the goals of the company on track, provides a sense of direction and enables the owner to visualise what is feasible and what is not. Having a business plan is crucial when seeking for finance as this will show the banks and investors the profitability of the business and why they should invest in the business.
In writing your business plan, several steps are needed to be taken into account such as: doing research, determining who the plan is for, and getting the actual vs expected figures. You can consult with business planning professionals to help you draft your plan, or read this guide from Business.gov.au.
Tip 2: Establish a budget Businesses often make the mistake of establishing a budget that is not realistic, whether or not you are making use of a budget spreadsheet, you need to determine where your money is being spent each month. To be more in control of your cash flow, a budget template is a must in order to save up for your future goals. Obtaining the correct loan with the appropriate e interest rate for your business and using it accordingly is the toughest part. The key is finding a way to track your funds. In order to do so, here are some guidelines:
• Take note of your net income (monitor how much money is coming in and not to overestimate the amount)
• Track your spending (categorise your expenses and make amendments where necessary. This will enable you to cut cost where possible)
• Set your goals (make a list of your short-term and long-term goals)
• Make a plan (break your expenses even further between your wants and needs for the business)
• Adjust your habits if needed (review your budget and where unnecessary transactions are being made, cut them off)
• Keep checking (go over your budget on a regular basis to stay on track)
Taking those points into consideration will enable you to set up your business cash flow correctly and pinpoint the right loan that you need. It will also help you to keep good track of what is happening with your finances.
Tip 3: Set a time frame to repay your loans Repaying your loans can be a hassle, but it’s not as hard as you think. Initially, you will need to establish a realistic budget as suggested above. The next step is to find a bank that is willing to provide you with lower interest rates on a long term basis or higher interest rates on a shorter basis. The following tip will make sure that you are making the right choice.
Tip 4: Seek advice from a finance broker Seeking advice and using the service of a finance broker can help you in your business venture. Finance brokers can help you better understand what your needs are. They will discuss with you the different financing options available to you and on your behalf, can negotiate with banks and other creditors to get the ideal loan for your business.