To most people, family and friends are the first people that come to mind whenever the need for funds to run a business arises. But what happens when your folks don’t have the means to support your dream? Well, that’s where bank loans come in handy. Historically, bank loans have been the major source of capital for most people who want to start or run a business.
Many small business owners in Canada start their financing search with Smarter Loans – Canada’s Loan Directory. If you haven’t visited it yet, make sure to check it out for a list of Canada’s most reputable lenders.
As the global economy shifts and dips, obtaining credit is not as easy as it used to be. If you’re a first-time borrower, you should try to understand what bankers look for, how they asses loan requests, and what you can do to make them approve you for a business loan. The following are some helpful tips on how to get a business loan from a bank in Canada:
Craft a winning business plan
The first thing that any Canadian bank will do when considering your loan request is to determine whether your business model is viable. If you do not have a rock-solid business plan to show that you’re borrowing money to fund a business that’s destined to succeed, then your chances of approval are slim, if not nil. By writing a good, detailed business plan, you’ll prove that you’re truly committed to a business that is destined to succeed. This will increase your chance of getting approved for a small business loan.
Take proactive actions to build market share
Before approving your loan requests, banks will also want to know the actions that you’re taking in order to grow your customer base. Therefore, it’s advisable that you take proactive actions such as:
- Investing in operational efficiency to improve productivity and reduce costs.
- Merging with other businesses or carrying out acquisitions in order to gain access to other viable markets.
- Developing new services or products to widen your market and keep up with emerging customer trends.
- Exploring export markets to grow your customer base.
Taking such proactive actions will enable the bank to see that lending you money to run your business is a solid, secure decision investment.
Gather documentation to prove your Financial stability
Most banks in Canada will need you to be in healthy economic standing in order to approve your loan request. No matter how great your business idea is, if it’s not profitable, it might not be worth the risk. Business loans in Canada require careful planning. Therefore, you need to prove that your business has the potential of generating a steady income. What you need to do is to gather documentation to prove your financial standing. Be sure to prepare past and current documentation, including invoice statements, pay stubs and receipts.
Shopping around for the best deal can greatly help you find the lender that has the most favorable terms. Be sure to check all the loan conditions, interest rates and reviews at Smarter Loans beforehand so that you can determine whether it’s a good fit for your needs. If you’re lucky to get a business loan, be sure to maintain a good relationship with your banker so that you may have an easy time obtaining another loan, that’s if you’ll ever need another one.