Most lenders would rather see your business fail than not get paid back at all. So, you have to convince them that they won’t lose their shirt if they give you money – and the only way to do that is by showing them where every penny of their loan is going. This may mean you need to front some costs before the bank approves your loan, which requires an initial investment on your part.
Commercial Loan Tips:
The first thing you’ll need to do is create a business plan – not just financial projections but also marketing plans, staffing plans, etc. Then sit down with someone who understands what you’re doing in this business and can walk you through the basics of securing a loan. Most importantly: don’t go into debt unless the opportunity is worth it. Are you starting a food truck? Great idea! But if your business doesn’t have enough cash flow to support that kind of expense, keep your day job until it does. Otherwise, you risk losing everything before you even have a chance to succeed.
Remember that no bank will ever call off their dogs for missing a payment or two on a commercial loan – mainly because they know that small businesses fail all the time as well as we do. So, it’s critical to your business’ success that you pay on time, every time – even if it’s only a few cents here and there.
It can be easy to get excited about securing commercial financing when times are good, but it’s often wiser to save up for what you need rather than approach lenders or loan sharks with high-interest rates. Of course, you may end up paying more, in the long run, this way, but at least you’ll owe nobody anything when you succeed!
Just remember: most importantly of all, don’t go into debt unless it’s necessary for your business.
Conclusion
So, the key to a significant commercial loan is a well-thought business plan. It would help if you were sure that your projections are based on realistic projections and that you can afford to take out this loan or line of credit. If you’re not sure, consult with someone who understands what is involved in securing such things before moving forward. Also, remember that most banks will always try and get the most money they can from you – so make sure they see everything involved in starting up your business or expanding it before signing anything off with them.
Now we know why we should only apply for commercial loans when we need them and how important it is to prepare correctly and realistically each time we do this. I hope this article helps you get your new business rolling.