It is common knowledge; all you business folks know that businesses need money or cash flow to run their operations. But it is also a fact that sometimes a business falls short on funds and needs to borrow money from lenders. It is a kind of alternative funding if you ask me. No, it does not means that a business is failing; I mean, if you look at large and giant companies, they often borrow money when they fall short on liquidity. Bottom line, there are times when you need lenders to give you a loan, but it’s not that easy getting one.
To get money from these people, it’s necessary to make your business attractive to lenders. The math is simple! The greater the numbers of lenders prepared to work with you, the more likely you will enjoy getting money along with better financing chances.
So, how to attract lenders for a business loan? Here I am listing some ways you can apply to your business to make it more attractive to lenders.
Organizing Your Business Planning And Numbers Is Must
An important factor that lenders look into is your company’s strategy. So, you must ensure that your company strategy is the finest it can be.
To accomplish this, make sure it depicts your company’s future plan and its realistic financial projections. For example, how much outside capital your company needs, where that money will be invested, your predicted sales and earnings, and what assets you’ll need in the future.
Avoid Bad Credit Is A No No
I don’t think I need to tell you that bad credit is one of the most crucial aspects that lenders consider when evaluating whether or not to lend money to a company.
To get authorized for a business loan, you must eliminate any red flags that may cause a lender to have doubts, such as charge-offs, collections, defaults, judgments, and missed payments, among other things.
Don’t Forget, It All About Your Ability To Pay Back.
Lenders are nothing like investors who might be ready to wait for a liquidity event. No way! These folks require proof that your company can pay back the loan because they make their money by getting periodic payments.
So, in simple words, I am telling you that lenders are not investing in your enterprise. Instead, they are selling money services and take decisions based on your business’s ability to repay the loan. So, demonstrating the capability of making regular payments is the single most vital component of getting the funding you need. You can also opt for invoice discounting or invoice finance and use your firm’s unpaid accounts receivable as surety for a loan.
Increase Profitability And Reduce Wastage
You may be able to boost your chances of obtaining additional funding by demonstrating that you can maximize cash flow by lowering your costs.
You can do this by making your production process more streamlined, cutting waste to its maximum, and creatively using the unavoidable wastage to earn money. Remember, cutting waste includes not only your production waste. It also adds unnecessary expenses such as more staff, wastage of electricity, spending money on smaller tasks that can be done at a lower price through outsourcing, etc.
This will show your inventors that you have a keen eye for financial management and will make you more appealing to them. Not to forget, it will highlight your ability to make money and pay off the loan.
A Strong Management Team Might Be Your Asset Here
The level of potential that investors see in your management team might be a big deciding factor in favour of funding in your business. So, as a strategy, it’s critical to highlight your team skills and describe how you plan to cover the important areas of administration, finance manufacturing, marketing, and sales.
It’s also a good idea to show how dedicated your team is and how hard they work to achieve business goals.
Give your business options with Fifo Capital.
Find out how Fifo Capital can help to improve your cash flow!
Speak to our Team, call 01 691 7515.
P.S. To be eligible for our Invoice Finance service, your business must be a limited company that serves and invoice businesses on credit terms.