What can you do to be a more convincing prospect?

Getting finance for a great business should, in theory, be a piece of cake. However, there are many, many tales of entrepreneurs and start-up owners who have really struggled to get their business off the ground. Start-up loans are a solid option for businesses seeking early finance and can provide you with that all essential initial capital to start building your brand. But you may not succeed every time. If you’re looking to improve your chances with start-up loan lenders then there are a few ways to help you get approved.

Find an industry specific start-up loan

You automatically better your chances of getting a start-up loan if you’re trying to borrow from a lender that is specific to your industry. Fashion and beauty, business services and technology start-ups have specific lending channels to go through (e.g. Fashion Angel) and tend to be particularly successful when it comes to getting approved.

Make sure your own finances are in good shape

Most start-ups don’t have any assets and if you’re looking for a start-up loan then you probably don’t have any capital either. In that situation, a lender would look to you to guarantee the loan repayments and that means you need to be a good credit risk. Failing that you need a guarantor who is a good credit risk and then you might have the chance of finding a guarantor loan. Before applying for start-up finance make sure that you get hold of your credit record so that you can see what the lender is going to see. Fix any black spots and maybe give it another six months or so to improve your own credit score and you could well increase your chances of success.

Be on top of your numbers

This is both for your own benefit and to give you a better chance of getting that loan. If you want to get a start-up loan then you’ll usually need to convince a human being that your business is worth the lender risk. This means being totally on top of your numbers, most importantly what you’re going to be using the cash for and how that will generate the income to repay it.

Have a pitch ready

Depending on the type of business funding and finance you’re going for, you may or may not need to go through a full pitch situation. However, it always pays to be prepared. So, have your pitch ready before you make any applications. This should show you’ve researched the business – customers, costs, gaps in the market – and enable you to demonstrate a strong concept that will be convincing to a lender.

So, remember if you’re not having much luck with that start-up loan all is not lost. With a little more preparation and time you’ll get the approval that you need to get your business off the ground.

  • Work on your own credit score first, if it needs it
  • Be clear and unambiguous about what you need the money for
  • Apply for the loan via an organisation that specialises in your specific industry
  • Prepare your pitch documents so that you can present the business if necessary
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