Every business sector is different and has its own financing needs. Most sectors are cyclical but some less so, and whilst some sectors traditionally experience peaks in the summer and lulls in the winter, others find precisely the opposite. So when you’re seeking business finance, it’s important that your lender understands your industry and its challenges. But what’s the best way to obtain sector-specific finance?
Write a detailed business plan
When you’re applying for a generic bank loan, your loan manager will focus mainly on your underlying finances and business prospects. However, if you’re looking for industry-specific finance, you’re likely to connect with someone who understands your sector in depth. Make sure your business plan clearly indicates your position within your industry and sets out your goals in depth if you want to be approved.
Don’t skimp on the data
Of course, many alternative lenders will not request a business plan in the first place, as they have quite different approval criteria from banks. However, the fact remains that the more information you provide, the more likely you are to get the loan (and the terms) you want. This doesn’t have be limited to raw financial data, useful though it is, customer reviews and trade journal articles about your company can provide excellent context.
Clearly state what you need
Whether or not your lender wishes to see a business plan, you should draft one to focus your thinking. This should detail exactly what you propose to do with the loan and how the finance will transform your sales and corporate growth. In turn, this will enable you to define exactly how much you need to borrow. Ask for too little and you won’t be able to implement your plans, request too much and you could find yourself paying unnecessary interest.
Identify what security you can offer
If you can offer collateral, you’re much more likely to be accepted and to be charged the most competitive interest rate. This could be anything from your premises to a specific piece of equipment, some intellectual property or even an asset that you hold personally (though bear in mind that if you miss repayments, the asset could be seized by the lender).
Don’t forget to shop around
Even if the first loan you find appears to meet your needs, it makes good sense to shop around. Once you have a few options on the table, carefully compare interest rates and repayment terms to see which is most cost-effective. It’s also worth comparing application processes, as some lenders may make you jump through hoops whilst others offer a straightforward and simple route to approval.
Author: Carl Faulds, managing director of Cashsolv offers advice and alternative finance support to overcome cash flow problems. Cashsolv Business Loans can help to provide quick finance and ensure a positive future for your business. Follow @cashsolv on Twitter.