We are proud to announce our NEW community destination. Engage with resident experts and fellow entrepreneurs, and learn everything you need to start your business. Check out the new home of StartupNation Community at startupnation.mn.co
Securing the Right Loan as a Startup
Hi all! First off, congratulations on your business idea. Here-this moment-the realization that this is your calling can send emotional waves of feverish excitement, fear, and several others you may not have felt before. You're ready to go, but first, check out my tips on ensuring that you secure the right loan for your business and current state.
- Have a well written business plan: By researching all aspects of your startup, building and understanding of the market, and having systems in place will show your potential lender that you have done your homework. Also, be sure that you include cash flow projections of the next 12 months to demonstrate your understanding of what to expect.
- Strong Credit Score: Yes, it matters. I recommend that you check your credit score on a free site such as credit Karma before pursuing lenders. If you find that your credit score is low I recommend that you take about a month or 2 to improve it-this will make you more eligible for a loan.
- Understand your needs: You must be able to accurate figures or your very best estimates of the money you need. Also, you should provide info on what the money will be used for, how you intend to pay the loan, etc.
- Your current situation: If you're already operating as a startup you must provide the lender with a report detailing key performance indicators (KPI) in your business plan. Prepare current financials and be prepared to discuss them.
- Follow up: Once you've submitted your application and have possibly met with a representative ensure that you provide all the information being requested.
And remember, if your application gets rejected don't give up! We understand it can hurt, but instead of losing hope, use this as an opportunity to find out why this didn't work out. What were you missing? Were you unprepared in some areas? Pinpointing specific weaknesses will allow you to take steps to improve for the next time. Hope this helps! Comment below if you have any questions or something further to add.