Finding the right type of finance for your business is crucial to success. Here, we look at some key steps you can take to help you improve your eligibility for a business loan.
Develop a strong business plan
If you receive a small business loan, what will you use it for? It's important to create a solid business plan that details the purpose of the loan and how it will help you increase profits. This plan should have current and projected financials, while also demonstrating that the business not only has the cash flow to cover business expenses, but also the new loan payments.
Get your financial statements in order
Ultimately, lenders will decide whether or not a small business should receive a loan based on the borrower's risk profile and credit report. Current and previous financial statements give lenders a clear view of your ability to manage funds. A clean, well-managed balance sheet will show your business is financially stable and fiscally responsible, improving your eligibility for a loan.
Review your online presence
The perception of a business can influence whether or not it receives a loan. Part of the lender's due diligence will include reviewing your business's - and your personal - online presence. You can anticipate this due diligence by examining your company website, social media pages and any online reviews your business may have received, among other items. Putting forth a polished, professional online profile will showcase the potential your business has.
Be prepared to provide collateral
Collateral, which is an asset such as equipment, real estate or inventory that can be seized and sold by the lender, may need to be provided to back your small business loan. As you prepare to apply for a loan, consider what assets would be appropriate to use as your collateral.
Check your business loan eligibility
Want to find out if you're eligible for a business loan? Check your eligibility with the HSBC Business Lending Eligibility Checker.