Applying for business finance can be a daunting task. There are a few things you should avoid to make the process as smooth as possible. Here are five of the most important ones.
1. Asking for too much
When you’re applying for finance, it’s important to be realistic about how much money you really need and what your minimum budget is. If a lender feels like they can’t “solve” your challenge or objective, they may reject the application altogether.
2. Being unprepared
Being unprepared can also hurt your chances of being approved for business finance. When you talk to someone about obtaining finance, be prepared to talk about
– Your goal or objective
– What you do for a living
– Your company’s financial performance
– How funding is going to improve the business
3. Not having a plan
A business plan shows the lender that you have clear goals and objectives for your business, and how you plan to go about achieving them. By preparing forecasted financials you can showcase the opportunity to a lender, and how you will be able to service the loan.
4. Applying for the wrong type of loan
When considering which type of loan to apply for, it’s important to understand that loan products are created to solve a particular goal or challenge. Making sure that you find a loan product that suits your cash flow cycle is incredibly important. Applying for the wrong type of loan can be costly, negatively impact your cashflow, and even restrict you from borrowing further funds later when you need it.
5. Applying when you don’t meet the criteria
When you’re submitting an application for business finance, it’s important to make sure you meet the lender’s criteria. Applying for finance when you don’t meet the criteria can significantly decrease your chances of being approved or being approved with unfavourable terms.
If you don’t meet a lender’s criteria, it’s best to wait before applying. Otherwise, it will likely lead to a credit enquiry that will impact your credit score.
A finance broker can be a great resource when applying for business finance. They can help you avoid these and other pitfalls that can impact the way a lender looks at you and your business.
At McHugh’s Financial Services, we find the most suitable lender and loan for your business based on your goals, support you throughout the application process and negotiate with the lenders on your behalf, to help you find the working capital you need for your business.
Talk to us today to learn more!
