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Published on April 13th, 2014 | by Pete

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Riding those choppy waters – how to get the ideal business loan

Yup, the world of finance is a cruel beast at the best of times. Just look at the meltdown of 2008 – if the finance industry is an ocean, that meltdown was a mega-tsunami crushing almost every banking institution the world over.

Primarily because of the “boom and bust” culture we live in, it’s pretty hard to figure out what next year’s financial markets will look like.

Will the banks be in a stable mood, quietly recovering from the meltdown? Or, will they be shutting more of their branches in a bid to save money, as the Royal Bank of Scotland did with 44 of its outlets this week?

As a consumer, it makes trusting the banks a difficult task.

But, just imagine the thousands of suspicious thoughts piling through the head of your average banker – you, the customer, hold the potential to give these financial institutions bad debt, pushing them even further from financial sustainability.

This, coupled with tightened rules from the Financial Services Authority (FSA), means that the simple act of taking out a loan for your business has become more challenging than negotiating a tidal wave in a rubber dinghy without a paddle. And, there’s a hole in the dinghy. And, the wave is totally massive. You get the idea. It’s difficult.

While the FSA has tightened up holes in bad lending for banks, they’ve also made it increasingly difficult for the Average Joe to gain a financial shot in the arm when their business needs it most.

With this mind, what steps should you take to secure finance and negotiate those choppy waters?

1. Look for alternative measures

After the financial crisis hit, the need for alternative finance suddenly became a pressing issue. As such, routes like invoice discounting, crowdfunding, equity crowdfunding and construction finance have become a major part of the financial landscape, being valued in the UK at more than £939 million in 2013.
So, take a look at your alternatives before you jump foot-first into a bank loan.

2. Make your business plan bulletproof

Forget your heady, pie in the sky dreams when you’re applying for a business loan. What you need is a cold, calculated business plan that will take, at the very least, the next couple of years into account for your enterprise.

Before you step in through that bank manager’s door, outline every possibility for your proposal and know them inside-out. That way, your bank manager will understand that you’ve got your finances under control.

3. Know how much you want before any meeting

Ummming and Ahhhing at the question, “How much would you like for your loan?” is never going to go down well in a bank. Again, this will make you look unprepared and, potentially, far too out of your depth for the FSA’s liking.

So, know what you want, seem steely about your decisions and that finance will come rolling your way.

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