Finances and Chances: Increase the Odds of Getting a Business Loan

Business LoanFinancial capacity is the lifeblood of every business. Smart Auckland business owners explore different options to finance their operations, with some resorting to borrowing from institutions. Most entrepreneurs, however, find the loan process a bit intimidating and this often keeps them from securing approval.

Although Auckland loans seem to be a complex matter, there are strategies you can use to improve chances of getting approved. Such tactics operate under one principle: give the lending agent every reason to trust you.

Inside the Lenders’ Mind

What goes on in the mind of lenders when they review financing proposals? Well, they usually start with a thorough look at your credit standing. It is only after this that they move forward with checking your character and capacity.

Your financial character relies on credit history. Although you are applying for a business loan, agents will likely review your personal credit history as well. This means the way you handled money in the past can significantly affect their decision. Of course, agents will also review your company’s credit rating. Check your credit report and correct discrepancies, if you see any.

Capacity refers to the amount of debt load your business can keep up with. Agents will review your net worth, while considering debt. You may not be able to secure approval if you have large amounts of debt — even if you have a huge net worth. Evaluate your finances; pay off remaining debts.

Once you have cleaned up your credit, your financing proposal will be more appealing.

A Plan of Action

The next step is to draft a business plan. Work with an accountant with this; a well-written plan can increase your chances of approval from a lender.

Outline the essentials: (1) reason for setting up the business; (2) short and long-term goals; (3) plans of action to achieve such goals; (4) market and customers; (5) products and services; (6) competitors and challenges; (7) key success indicators.

The secret to getting the lender’s approval boils down to giving them a reason to trust you. Are you trustworthy of finances? If yes, do your records and business plan back that up?