Learn what you should be aware of about business loans, before you apply.

1. Business plan

Before you start looking for loans, ensure you have a solid business plan in place. This document will outline your business goals, strategies, and financial projections. Lenders will often ask to see it to evaluate your business's potential.

2. Loan purpose

Determine the specific purpose of your loan. Whether it's for working capital, equipment purchases, expansion, or something else, understanding your loan's intended use is crucial.

3. Loan amount

Calculate how much you need to borrow. Be precise in your estimate, considering the costs of your project or expenses you need to cover. Avoid borrowing more than necessary to reduce interest costs.
4. Repayment terms

Understand the repayment terms offered by different lenders. Business loans can have fixed or variable interest rates and various term lengths. Find a term that aligns with your business's cash flow and financial goals.

5. Collateral

Some loans require collateral, while others are unsecured. Collateral can be business assets or personal assets. Ensure you're aware of the collateral requirements and how they may affect your business or personal assets.

6. Interest rates

Interest rates vary between lenders and loan types. Shop around and compare rates to find the best deal. Consider whether you prefer fixed rates for stability or variable rates that may change over time.
7. Creditworthiness

Lenders will evaluate your credit history and financial statements. Maintaining good personal and business credit is vital. Review your credit reports and address any issues before applying.

8. Professional advice

If you're new to business loans, don't hesitate to seek expert advice. A financial advisor or business loan specialist can help you navigate the complex world of business financing.

9. Lender options

Research different lenders, including banks, credit unions, online lenders, and government programs. Each has its advantages and disadvantages, so choose one that suits your needs.

10. Application process

Prepare for a comprehensive application process that includes providing financial documents, tax returns, and legal information. Being organised and having your documents ready can speed up the application process.