SMEs need sufficient working capital for business development. However, gaining more capital is not never easy, especially if you were thinking of applying for a loan. The best advice we can give is “prepare well.” Here are some steps that will help boost your chance for SME financing approval.
Build a strong business plan
Investors are always looking for a company with a strong business plan. A solid business plan is the most crucial factor in dictating whether your business will be a success or a failure. Investors want to know if you have a clear vision for your business, along with a realistic view of what can be achieved, and strategies on how to get there. So make sure you detail your vision to build a compelling case for your investors.
Provide detailed information
Never skimp on details when dealing with financial institutions. Tell them exactly how much money you need to accomplish your goal and give them specifics on how you will spend the funds. For instance, maybe you need new equipment to optimize your production process. Provide equipment cost, how much money you need to purchase the needed new equipment, and explain specifically how it will help you grow your business.
Share your financial information
Be blunt! Give your investor or lender the financial background of your company, the company’s future growth plans, and even personal financial information if you must. It will allow them to gain more understanding on your financial condition. Detailed, organized information and sophisticated documents will illustrate how well you’ve run your business in the past. Investors will more likely invest in your company given the increased confidence in your business’ performance.
Understand the kind of financing you need
There is a lot of financing products out there today. Do you want to go with a traditional bank loan? Or do you want to try alternative financing such as peer-to-peer lending? It is important to research on the types of financing to find out which is most suitable for your business. Do you have enough assets for collateral or do you need to look into unsecured lending? Do you need short-term credit or something more long-term? List down all your needs and look for an appropriate loan product.
Look for alternative solutions
Today, with the rise of financial technology, there are more choices on the market – many of them online-based and easy to use. Crowdfunding and peer-to-peer lending can be especially suitable for SMEs as these financing methods provide fast and accessible financing.
Gaining capital may not be easy, but prepare well and you will optimize your chance to secure financing. Good luck!
In need for funds? Check your eligibility now!