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1. Can I really afford a loan?
Silly question? Not really. One of the first questions every lender wants answered is, “Can this borrower repay the loan?” That’s one of the reasons they want to see some experience in business and your bank statements. If you can’t honestly answer, “Yes, I can afford a loan payment,” it’s not unlikely your loan application will end with a “Yes” from the lender.
2. How much do I really need?
“As much as I can get,” is never a good answer. Small business owners always need capital, but borrowing capital can be expensive – in some cases very expensive. Paying a premium for more capital than you really need just doesn’t make sense.
3. Why do I need the money?
This question fits hand in glove with Question 2. Borrowing capital to take advantage of opportunities to purchase such things as equipment or inventory at a discount is a great reason to access credit (provided you can positively answer Question 1). Even if you need to bridge a short-term cash flow need or have some other need for financing, you should be able to articulate exactly why you need the money and how much you are looking for. This tells the lender you understand how to use borrowed capital and you’re not a waste of their time.
4. Do I have all my ducks in a row?
Although every loan and every lender is a little different and requires different documentation, if you have some of the most requested documents in order before you approach a lender you’ll avoid wasting everyone’s time. Start with your past two years of business, the last three months bank statements, and a list of other loans or lines of credit you may have. Standard financial documents like a current P & L statement should also be at your fingertips. It’s not enough to have the documents either, it’s important to really understand what all this information means.
5. What is my current credit score?
Did you know you have both a personal and a business credit score? If you’ve only been in business for a few years, your personal credit score will be part of the equation, but it doesn’t tell the whole story. Your business has a credit score too. A bad credit score doesn’t necessarily mean you won’t get a loan, but it could mean you’ll need to pay a little more for the capital. It will also make a difference in where you should be looking for a loan.
6. What are my real chances with this lender or loan type?
It’s really important to understand the nature of the financing you’re looking for. For example, if your credit score is weak and you don’t have five or six years under your belt, a traditional loan at the bank, will be a waste of time. Nevertheless, even if you have a less than perfect credit score, but have a healthy business with a steady cash flow, there are a lot of options that will work for you.
This is where Go Commercial Finance Ltd can help. On our initial contact, we will discuss your specific requirements and ascertain how we can help and what information is needed. This enables us to not only get the best deals for you but to get the deals done and get the funding you need in no time at all.
For more information, please call 01446 506506 or visit www.gocommercialfinance.com fill out a contact form and we'll call you back.
