By Charlie Brown

Small businesses can have a challenging time trying to get financing. This is because they are presumed to be high-risk borrowers by major financial institutions. However, you can still get financing for your business irrespective of the products or services that you are selling. Here are five tips that will help you to maximize your chances of getting credit.

Secured or unsecured

Determine whether you want secured or an unsecured credit. This is because most financiers will not have issues giving you a secured loan because they already have a way of reclaiming their money.However, unsecured credit can pose challenges to most borrowers. This is because the creditor must first prove that your business is capable of repaying the loan.

Prove that your business has steady cash flow

Money is a major indicator of the future prospects and wealth of your business. You should be able to show that you have a steady and adequate flow of cash in your business. This will prove to prospective lenders that you have enough money to pay your employees and creditors and cater for operational costs on time. You should be able to provide tax returns, bank statements and financial statements. These documents help the financier to determine the liquidity and performance of your business.

Your payment history

You should maintain a positive debt payment history if you want to get credit from financiers. Lenders want to confirm that you have a good record and you pay your debts on time. Make sure that you have documents that back you up as a good borrower. You can demonstrate this by getting references of people that you deal with in the bank or your trade suppliers. This will give you an upper hand and ensure that you get credit from financiers such as

Lower your debt load

If you have another loan that you are servicing, you should make sure that you can handle paying both debts. If you are servicing a bigger loan, it is important that you reduce the loan before you apply for another one. Prepare paperwork in advance to demonstrate how the additional loan will be used in the business. You should also demonstrate how it will be beneficial to your business.

Shop around

When looking for credit for your business, you should be willing to shop around. You should never pick the first creditor that you come across. You should never assume that your financier or bank offers the best interest rates and terms. Take your time to comparison shop and compare the lease terms, fees, interest rates and other aspects of the loan. This will ensure that you get the best loan that you will be able to repay without any problem.

When looking for a business loan, you should have plans in place to take care of any challenges that you might face. You may face obstacles when you are still servicing your loan and your creditors want to be sure that you will still be able to pay your monthly charges irrespective of the problems you face.

Therefore, you should plan ahead and think of any eventualities and how you will handle them. You should also ask for help whenever necessary so that you can choose a loan that will boost and not mess with your finances.

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