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5 Simple Tips to Secure a Loan for your Small Business

30 January 2014

Given the unstable state of the economy, it’s almost impossible to secure a profitable business loan, especially for women entrepreneurs. In a prediction made by Market Pulse, Australia’s economy will be tested this 2014, as the country is still in the process of shifting to newer and broader means of economic growth. This unfortunate event places female entrepreneurs in a bad pedestal, inhibiting their ability to make a difference based on their own terms.

Fortunately, there are various companies worldwide that lobby for equal rights of female business owners. O2 from the United Kingdom fights for the equality of rights in the business sector, after revealing through a survey that women tend to “act like men to get ahead of work.” Through their Women in the Workplace campaign, Telefonica HR Director Ann Pickering said that lending “firms must sit up and take notice, as having a diverse force makes a complete business sense.”

If you’re thinking of building your dream business soon, here are effective and simple tips that you can apply to successfully secure a loan for your startup.

1. Know your options

Before coming up with a major financial decision, it’s important to know the best lenders in the industry. In choosing, look for the bank has a good record in lending businesses. This means ensuring that they do not impose high service charges of their clients. You may talk to the bank loan officers to negotiate your terms, and let them review your credit history and score. Also, check for the one with online services to make the payments easier while on the go.

2. Create a plan

To convince a lender that you’re worthy of their money, you must draft and present your business plan. In an interview with The Telegraph, finance expert Barry Evans stresses that you must be “upfront and realistic about forecast profits and expectations.” This includes integrating the idea of the fluctuating market and how you plan to address your financial situation. Lastly, present detail key figures such as cash flow, turnover, profits, and obligations.

3. Narrate the company’s story

A common mistake made by female entrepreneurs is that they fail to share the story of their start-up. BBC Easy founder James Walter said that you must state the reasons why your company needs the money. Consider telling a little background about your startup, how you got inspired, who are your partners, and your target market. To increase your chances, tell them how your company is experiencing growth as well as your future prospects. Remember that lenders value your entrepreneurial drive most before approving your request.

4. Consider the trend of alternative financing

According to the INC, alternative financing is perfect for new businesses that need funding for short-term needs. Also called as the asset-based lending, this approach allows you to sell your accounts, giving you a short-term loan of at least 80% of the total value. To determine your eligibility, the lender will evaluate you based on your inventory values, fixed assets, and credit score. However, INC notes that the interest rates on these loans are higher than the traditional ones.

5. Consult women-centric credit unions

Citing National Small Business Association board member Marilyn Landis, Scotts Marketplace suggests resorting to credit unions as an alternative for banks. These female-centric unions are implementing loan programs, with the ability to seek funding help from women professionals across the globe. One of which is the Global Women’s Leadership Network that provides funding and a network that improves their professional and personal development. Through business forums, they provide help in terms of alternative capital, growth in business, and efficiency in operations.

On top of all these tips, take note that overall character is the best deciding factor, which includes your educational background and your experiences in the industry. In just a few months, you will reap the rewards and experience a sudden boost in business profit. What’s your loaning tip to our ladies thinking to build their startup?

When she’s not writing, Reese Jones helps her older sister in managing her start-up retail business. In this endeavour, she helps in doing the necessary paperwork before her sister’s big interview with a female-centric lending institution in Birmingham. You need more insightful views? Join Reese in her Google+ circle.

Image courtesy of ccstbp