5 Things You Need Before Applying for a Business Loan
Banks, money lenders, and other financial organizations are reluctant to lend money to entrepreneurs with no proven track record of running a successful business, so it's important to gather as much information as possible before applying for a loan. Planning and preparation are the keys to securing finance for your new business venture. Here are five things you need before applying for a business loan.
A convincing sales pitch that you can memorize and recite on command is crucial for grabbing the attention of investors and money lenders. A sales pitch can be a summary of your business plan, a mission statement or a sound bite that encapsulates the essence of your business idea, but it must provide enough information to demonstrate that you know your business well and can clearly define its purpose.
Unique Selling Proposition
A unique selling proposition (USP) is the thing that sets you apart from other companies selling similar products and gives potential customers a reason to choose your products over those of your competitors. Your USP may be related to the price, design, features, and benefits of using your products, or it could link to the service you provide, such as next-day delivery or customer support for product installation.
All investors and money lenders expect to see a solid business plan before providing a loan, so you will need to draw up a detailed plan of your business idea, operations, and future projections. When writing a business plan, it's important to ensure that your readers will be able to understand the content. Avoid using industry-specific jargon and overly-scientific terms, as readers may lack the knowledge needed to understand your proposals.
While it's impossible to predict how much money a business will make, you need to provide financial projections that show realistic expectations for the future of your business. Loan officers expect both short- and long-term forecasts when you apply for a loan. You will also need to include a breakdown of all costs incurred when setting up and running your business, along with a plan showing how you intend to cover these costs.
Many new business owners overlook the importance of performing market research, but investors and money lenders will expect to see some evidence that you have defined and researched your customers, competitors, and the general marketplace. Using presentation software to create charts, graphs and diagrams to illustrate your findings will provide a professional look for your research.
Banks and other money lenders are reluctant to provide loans for entrepreneurs with no previous business experience, but they will usually consider applications from people with a viable business idea. Before applying for a loan, it's important to gather as much information as possible to show that you are serious about your business idea. Having a convincing sales pitch, unique selling proposition, detailed business plan, realistic financial projections and well-presented market research will increase your chances of securing a loan.
About nDemand Consulting LLC
The nDemand Consulting small business practice focuses on cultivating innovation across the private sector in the Greater Atlanta, Charlotte, and Washington DC locations. Specifically, our team specializes in Website & Graphic Design, Content Development, and Business / Funding Preparation. From past experience, our team has observed a gap between available funding sources for small businesses as compared to larger corporations. It is the goal of nDemand Consulting's small business practice to prepare entrepreneurs and business owners for real funding opportunities, real revenues, and real business growth.
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