It may be easy to conceive an idea, and maybe start a business. However, running a business can be quite difficult. Many business owners at some point in their business may require a loan or funds from investors to move their business ahead.
The following points serve as a guide to getting a loan for a small business.
WHY DO YOU NEED A LOAN?
How can a small business owner get a loan? Whether or not it is a small interest loan, it is necessary to consider the reasons for requesting a loan. Hence, before seeking a loan, a business owner should provide reasonable answers to the following questions.
- What do I need a loan for?
- How much do I need?
- What am I able to serve as collateral?
- When would I be able to pay back this loan?
- What kind of loan do I need?
WHERE CAN I GET A LOAN?
There are several organisations and companies that are available and willing to supply loans to small businesses, and many of them at a very low interest rate. The duration for the approval of a loan is variable depending on the organisations. Such organisations include:
- Microfinance banks, e.g Addosser Microfinance, amongst others.
- Online loan providers, e.g ZedVance
- Establishments such as SME Boutique Women’s Exclusive Club (SWEC), Lagos State Employment Trust Fund (LSEFT)
WHAT DO I NEED TO DO TO ACCESS A LOAN?
A strategic business plan cannot be ignored. When a business requires a loan, this could be for the purpose of an expansion. Therefore, present a plan including the need for this loan.
Two important aspects to sort out in a business, when seeking a loan, are the structure and financial management of the business. In other words, do you have an organised business structure that runs the business? Also, how are your numbers? Are your financial records up to date and comprehensible?
It would be of great advantage to have an adequate accounting system and a good business structure. These are highly crucial to obtaining a loan. Organisations would need to see that your business is profitable, and that the loan is payable within the stipulated time, before they approve a loan.
It is necessary to have proper legal documentation and financial records for your business. You should be able to prove that your business requires the loan and demonstrate that you would be able to pay back. Also, some loans may require collateral, and of course, referees.