It has become increasingly difficult to borrow money from the high street banks as a company, therefore you will have to be prepared to jump through hoops to get loans approved. Typically lenders do not like start ups as much as they may claim otherwise and this is based on facts, over a third of businesses fail in the first three years.
There are certainly things that you can do to improve your chances, what we will discuss here are the things that you can influence when introducing the idea of borrowing to the bank.
1) Prepare a business plan, if this is thorough and demonstrates a clearly structured approach to this it will help the lender to understand you business plan and what you are aiming to achieve. It is important to be realistic with figures, there is no doubt that the bank will sensitize to ensure that they are realistic and they will look at break even turnover and also the debt to equity structure that is displayed.
2) Be prepared to provide additional security for a loan. If your business is not strong enough in its own right from the banks perspective they will normally require additional security, which may be in the form of a charge over another asset, normally your house.
3) Make sure that your own credit score is in good. Most lenders will look at the credit scores of the directors of the companies which wish to borrow money, which will be another reason to reject a potential deal.
4) Consider the way that you come across when meeting a bank manager or lender, as if you are defensive or shady in some way lenders may not consider you seriously. Wear a suit when meeting your lender if possible and try to create the impression of a normal working environment if possible. The surroundings and everything else that is going on will be taken into account and should be noted by the lender and this will potentially impact your chances.
5) Provide examples of what you will be using the money for. Lenders would normally like some indication as to what the funds will be used for. Even if this is just general cash flow to help you whilst you get out of a sticky patch the more information that you can give the better.
6) Ask for a realistic amount of money! It sounds ridiculous, but some people will ask for ten times the amount they require and then get declined. Its more difficult to get back from a decline than it is a maybe.
7) Build a relationship with your local bank manager. Relationships can make a big difference in the lending decisions that are made, and can certainly impact the potential outcome.