Starting or expanding a business can present a host of challenges for owners and entrepreneurs. Along with the current covid-19 crisis where the majority of your new or existing workforce will be working remotely, you have the additional factors that your customers working practices are disrupted as well.
All of this uncertainty can add an extra dimension when it comes to securing financing for starting or expanding your business. Here is a list of the three most common scenarios faced by owners and a possible solution for each one:
#1 Your business is a brand new start-up
If all you’ve got is a great idea, when you approach a lender, you are going to struggle to secure a loan to start your business. However, a well-researched business plan, mapping the first year or so of your business into figures, can go a long way towards being approved.
A good business plan will detail every one of your start-up costs, including rental of premises and purchase or hiring costs for equipment, vehicles, and machinery. Also, you will need to detail how cash flows through your business and whether your customer will be paying for goods or services before they receive them or if they will be paying over the following months, which will have an impact on cash flow within your business, and ultimately how much money you will need.
#2 You (or your business partners) have a poor credit history
Most lenders will not solely make a decision based on your business plan. Before they approve finance, they will first carry out a credit check on you (as well as any business partners) and ensure you are who you say you are, so make sure all your documentation is in order.
If for some reason, your credit score is too low (the perceived wisdom that if it is below 720, then you are in trouble), you will have difficulty in securing a loan from a generic lender. In which case, you will have to seek out a specialist lender, preferably one who offers several services including business loans with bad credit.
#3 Your business needs to expand in a poor financial climate
With the number of businesses struggling and failing in the current covid-19 crisis, approaching a conventional lender to finance your business expansion can be very difficult. The current situation has left many lenders aware of risks, which can be a problem for online businesses, which are seeing unprecedented growth.
Again, the answer here is to go beyond what your local bank can offer and approach a specialist company that can put you in touch with a lender who understands the needs of your business and also the potential offered by financing your expansion.
Final thoughts
As you can see, having a good business plan is key, but the other factor is the willingness to look beyond the obvious sources for business loans and look for a different solution based on your specific circumstances.
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