What to know when choosing a small business loan

Whether you’re starting your first small business or looking to grow, you may be thinking about getting a business loan. It can be tricky navigating through your options, so here are five things to keep in mind:

1.    Work out your reasons

Before choosing a loan, be clear on why you want to borrow funds. It’ll also be one of the questions a lender will ask you. Common reasons include managing your cash flow, buying new equipment and expanding your business.

2.    Understanding your loan options

There are different financing options available to small business owners, such as:  

  • Business loans: funds that you can use to invest and grow your business.
  • Car and equipment finance: lets you buy a vehicle, commercial equipment, and machinery without dipping into your funds.
  • Business overdraft: approved extra funds linked to your business account. You can access it whenever it’s required, such as covering unexpected expenses.

When comparing loans, look at interest rates and check for any hidden fees and upfront costs.

3.    Have a business plan

When applying for any financing, lenders require a detailed business plan that shows what you want to achieve and how you’ll do this. It takes time to prepare and research, so don’t rush it and consult a professional if you need help.  

4.    Get your paperwork in order

In addition to your business plan, get your paperwork ready. This includes:

  • Financial statements
  • Proof of individual income
  • Bank statements
  • Identification (if you’re a new customer).

5.    Seek professional advice 

We can take the guesswork out of finding the right finance solution for your small business. We’ll get a clear idea of your business’ needs and goals and provide recommendations tailored to your situation.  

As small business owners ourselves, we’re well placed to help you with your financing needs. Give us a call today.

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