Getting financing can seem like an uphill battle for many businesses, and they end up giving up on the idea because they assume that they’re not eligible. But that would be a big mistake to make. Business financing is more accessible than ever thanks to the increasing competition in the sector, and you should take advantage of it.
Big banks are not the only players in town and more lenders are open to considering applications from smaller businesses that haven’t had the time to fully establish themselves yet. That doesn’t mean, however, that they will lend money to everyone and there are things that you can do that will significantly improve your chances. Let’s take a look at a few ways in which you can improve your chances of securing business financing.
1. Apply for the Right Reasons
The very first thing you need to know is what makes an applicant attractive to a lender. While having a well-established record and a strong credit score helps, it’s not the only factor. A lot of people end up being rejected for loans because they asked for superfluous reasons.
The type of borrowers that lenders want to see are those who want to use their loans to foster growth, e.g., those who want to spend on publicity. Being able to show that along with forecasting will demonstrate that you are more willing and likely to repay your money. If you want to move into a bigger office and you don’t have a real business case for it, then expect your loan request to be rejected, even if you show good signs in other areas.
2. Look at Alternate Lenders
If you’re just getting started and you have little to no credit history at the personal and business level, then you may be losing your time with big institutional lenders. These are the ones who might scoff at a promising small business that hasn’t had the time to establish its credit and doesn’t have anything of value to put up as collateral.
However, you have lenders who would rather look at the real state of your business instead of just your credit score. They might look at signs of vitality, like cash flow, for instance. Advancepointcap.com is an example of such a lender. These lenders are much more likely to listen to you. As a matter of fact, you’re the audience they principally cater to. They may also help you figure out what you need to do to be eligible next time around.
3. Start Opening Accounts
You want to start building your credit by creating some verifiable financial activity. This means that you should try to open as many credit accounts as you can. These can be with a credit card company or with suppliers. Make sure that you open a credit file with one of the three main business credit reporting bureaus: Equifax, Experian, and Dun & Bradstreet. You then want to work with suppliers and lenders who will report activity to them.
Getting financing as a starting business can be difficult, but it’s far from impossible. By using these tricks, you’ll be that much closer to reaching your goal.