Improve your chances of being approved for a startup loan

Get the cash that you need to get your business off the ground.

You’ve had that genius idea, you’ve found your audience and you’re ready to launch your business – so, what’s next? For most people finance is the biggest obstacle to getting a business off the ground.

startup loan

More often than not that means applying for a startup loan and sometimes it means personal borrowing using one of the many different types of personal loans if the company has little in the way of a credit history. If you’re at this stage then there is plenty that you can do to improve your chances of a successful application.

Do what you can with your own cash first

99.9% of businesses start off on a bootstrapped basis, pulling together what resources they can to begin to trade. If you’re able to do this then you will considerably improve your chances of being approved for a startup loan. This will not only give you some real life figures to demonstrate to the lender that the business is viable but will also show just how committed you really are to making the business work.

Pay off other debts

If you have a lot of existing personal debt obligations then this could affect approval for a startup loan. So, before you start the applications process, take a good look at your own finances first. Could you pay off some of your debts or consolidate existing personal loans or credit cards to pay less in interest? This will make a big difference especially if you have guarantor loans or other types of secured loans. As the owner of a startup business, your finances will be as much under scrutiny as the enterprise itself so it’s important to make sure they look as good as possible.

Be competitive in your approach

Many business owners make the mistake of assuming that a startup loan is a done deal. In fact, you’re competing against tens (or hundreds) of other businesses in the same position all looking for a share of the pot that lenders have available for startups. So, if you want to improve the chances of success for getting approved for that startup loan you need to approach the application differently. Why should the lender approve your application, as opposed to the next business that applies?

Find a lender specific to your industry

Within the sub-category of startup loans there are many other lender subdivisions and choosing the right one to apply to could make a difference to whether or not your application is approved. Industry-specific lenders tend to be looking for businesses within their sector to support. Plus, they will have a better understanding of the challenges that you face, such as no – or low – initial cashflow.

If nothing else, get the numbers right

If your financial projections make sense to a lender then you’re off to a very good start. The numbers that you generate can be used to show why your business has a good chance of success, as well as how you’re going to make that success a reality. So, spend time and effort on the numbers – if necessary bring in the professionals to make sure you haven’t missed anything obvious.

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