So, you’ve got a business idea, a great vision of where you want your business to be and a plan of how to get there.
All you need now is some money. With a little homework you can be business-loan ready and on your way. Here are five things to do to prepare for a loan:
- Get your documentation and background in order Your personal credit history is relevant to your small business loan, especially if you’re very new in business. A bank (or other lender) may assume that you’ll operate your business finances the way you do your personal finances, so be sure to have solid records that show a history of income and of paying off debt in a timely and consistent way.
- Have a business plan Be very clear on the purpose of the credit you’re asking for. How will it help you grow the business and allow you to repay the loan? While a long, convoluted business plan is NOT necessary an outline of your plans (backed by conservative estimates of how you will grow) will help your case. Borrowing to be able to afford your rent is not necessarily going to look good on your application. Showing how you’ll invest in marketing, technology and innovation will.
- Know how much you need “As much as I can get” isn’t the answer the banks will be looking for. Ask for enough to get the job done, but not more than you can possibly manage. How much is enough? A set of financials (even sketchy ones) from the previous year, a budget for the next 12 months and cash flow projections show that you know your business and what you’re talking about. Not sure how to put a budget together? Look to your accountant or bookkeeper to help you put together the details before applying for a loan.
- Offer security While it’s possible to get an unsecured loan, most often a bank will look to secure a loan against an asset such as real estate. Being a home owner (with equity in your property) fulfils this requirement but if you have other tangible assets like investment property and vehicles you may be able to leverage off those assets to borrow.
- Don’t wait till you need the money Don’t wait until your cash flow has run dry to apply for finance. You don’t want to be desperate or at risk of going bankrupt when you’re asking for a loan as it’ll be difficult for the bank to help you at that point. Put in place cash flow projections so that you can predict when the best time for a cash injection will be.
Ready to apply for a loan? Get started here. The good news is that there IS money available to new small businesses, right now. In fact ANZ has pledged to lend $2 billion to new small businesses over the next 12 months. ANZ provides both secured and unsecured loans and lends to a variety of different business types and industries. An ANZ Small Business Specialist can assist you with every aspect of your business finances, consolidating your banking and streamlining your accounts. If you would like to find out how you can grow your business through finance please go to www.twobillion.anz.com to find out more. This post is sponsored by ANZ and is part of the ANZ Women’s Money Series which will be featured on the Australian Businesswomen’s Network website between March and June 2014. Disclaimers: Any advice does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you. ANZ recommends you read the Terms and Conditions and the Financial Services Guide (PDF 104kB) before acquiring the product.
