Three Things You Need To Know Before Getting A Loan For Your Startup
It’s 2019, and if you’re in the mood to start a new business, now’s the time! All the big businesses are quiet now since Christmas and New Year’s sales are over. Everything they’ve had to sell is now sold, and they’re biding their time to get back in the game as this month passes. Now, if you’ve got a great idea for a small business, this is why you’ll do best if you start immediately. This only works if you’ve got your research and market analysis, along with your business model, intact because these things take way more time than you might imagine. If you haven’t, that’s no reason to stop in your tracks.
2019 is still going to be a great year for startups no matter which month you choose to launch your business. If you’ve got your plans on hand and ready, you definitely should consider getting a loan (although things would be much better if your plan doesn’t involve a loan at all) and starting with your business immediately. We’ve done your research for you, so here is everything you need to know about the loan that you’re going to apply for:
Know The Market That You’re Entering
Easier said than done, convincing your bank that you’ll be able to return their investments successfully is not an easy task. This is probably your main hurdle towards getting your loan, alongside other problems which might be minimal and easily resolved in comparison. The first stage of assuring your bank that you’ll have their money back in due time is to know what market in which you’re launching your product or service in. If you don’t do your research in this regard, you’re already set up for disaster, and the bank is going to know that. Have a complete idea of what you’re getting yourself into, and make sure you can convey to the bank that your startup has what it takes to completely take over the market.
This is done by drawing from other products that share the same patterns that your product or service is going to be doing. You should know in advance how many potential customers you might have as time goes on. Use other markets’ data to demonstrate how your product or service could follow the same trajectory and generate huge amounts of profit.
Know Exactly How The Loan Money Will Be Used
This is another key detail your bank will want to know. When planning, too many startup CEOs make the mistake of misjudging how much money they’ll be needing. At times, they overestimate the amount, and in other scenarios, they set a digit that’s smaller than what’s exactly needed. Either of these cases will have you look like an amateur during your presentation, and that’s a recipe in failing to get the loan that you so desperately desire. You should have all the minute details of your business model in the bag, and that accounts for all the wages you’ll pay, all the material and equipment you’ll need in addition to any unforeseen costs that you’re planning for. The more complete your predictions are, the more you’ll impress the bank, and the more likely you’ll receive your loan.
Know Your Experience and Personal Spending Power
It’s not enough to just have a good business idea. It takes more to make a startup successful than just that, and if you have prior experience with management, marketing, influencing, or anything related to the success of your business, you need the bank to know. All they are interested in is how likely you are going to pay off the loan and more importantly, whether or not you and your startup are capable of paying them back in time. If you have a house that you provide as collateral for the bank, you’ll be far more likely to sign that loan document right away. It shows that you’re serious about what you’re doing.
Even if you fulfill all these checkpoints, you still might not receive a loan, in which case you should look elsewhere for funding because banks aren’t the only source! Don’t be discouraged about the possibility of getting declined. If you fail, keep your chin up and move on to the next solution!
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