1. Be open-minded
You think you're looking for a bank loan? Think again.
Yes, bank loans are one product that your business can use to get the finance it needs, but what many people don't understand is that there are hundreds of other products available. The chances that a traditional term loan is right for you are slim, especially with bank criteria being as tight as they are following the crash.
Other products that might be more suitable for your business include crowd funding, short-term loans, invoice finance, leasing, commercial mortgages, merchant cash advance and others.
2. Be realistic
Lots of business owners that we speak to are guilty of wearing rose-tinted spectacles when they approach us for finance. They might have seen an advert on TV describing great rates for business loans, or maybe they think that banks are still lending without security, as they did before 2008.
Remember that interest rates will typically be much higher than advertised. As an example, one recent client of ours was quoted rates of 8% from one high-street bank, and almost 20% from another. Your business will also most likely need to provide security, and sometimes that will be in the form of a personal guarantee.
3. Be honest
If you have a poor credit history, or your business has some skeletons in the closet, it's better to tell the lender straight away. The fact is, they will found out (it's just a matter of when) and if they found out during the last stage of the process, in due diligence, they're 99% more likely to pull the deal than if you're upfront about it to begin with.
4. Seek advice
You can't be expected to know everything as a business owner, and understanding your finance options is no exception to that rule. Sometimes you need to call on experts to give you some advice.
A great place to go is your accountant, especially if they're part of a recognized scheme such as the ICAEW's Business Advice Scheme. They'll be able to talk you through the options and help you compile your financial information in the best way for lenders. Of course, you can also use other advice services such as our own- we give free, no-obligation advice either through or on 0845 366 4199.
5. Stay informed
The business finance landscape is an ever-changing one. Even in the last couple of years there's been an influx of new, alternative lenders that often ask you to apply online, such as Funding Circle or Market Invoice.
Often, you can learn about these new options through organizations like the Forum of Private Business, but we also can help you keep up-to-date through our free programme of newsletters and webinars.
About the author
Conrad for is the founder of Funding Options
, which provides a range of online tools to help firms and their trusted advisers to manage funding and cash flow. Call the Forum on 0845 130 1722