Does your small business need to secure funding? In today’s uncertain economy, it can be difficult securing finance from a traditional lender. The lending criteria can be strict, which means you may need to first focus on improving your chances of success.
Here, you’ll discover some of the best ways to improve your SME’s chance of securing funding.
Focus on improving your credit rating
One of the easiest and most effective ways to improve your chances of securing funding, is to focus on boosting your credit rating. The better your credit score, the more likely you’ll be accepted. It’s not just your acceptance rate that will improve with a better score either. The higher your rating, the more affordable the repayments will be.
Remember, lenders offer finance dependant upon the risk. So, if you have a poor credit score, you’ll be seen as a higher risk and will either be turned down, or you’ll be offered a very high interest rate.
Understand your worst-case scenario
When you apply for funding, you’ll typically need to provide the lender with a business plan. This will highlight where you see the business going, and what the best-case scenario is. However, if you want to boost your acceptance rating even further, you may want to provide the worst-case scenario too.
This is because banks in particular, want to know exactly what they are getting into when they supply funding. If you can show that you have thought about all eventualities, they will be more likely to accept your application.
Familiarise yourself with relevant figures
A big mistake many small businesses make when trying to secure funding, is not providing the right figures. You need to go into the meeting understanding every figure to do with your business. That means highlighting your profits, as well as the amount you’ve already spent. It also means estimating future earnings figures and being able to show how you have come up with that figure.
The more clued up you are about the figures of your business, the more seriously the lender will take you.
Consider alternative funding options
Even with a great credit rating and following the advice above, you may still be turned down for the funding you need. This is because securing finance with a traditional lender is extremely difficult these days. If you are turned down, there are some great alternatives you can try such as unsecured business loans from alternative providers. Take your time to familiarise yourself with alternative funding options to see which would best fit your business.
Securing the funding you need for your SME isn’t always easy. However, if you follow the steps above you will greatly improve your chances.