Tips for Securing a Business Loan to Aid Your Venture This Holiday Season

Photo by Green Chameleon on Unsplash
3 years ago

With Halloween, Thanksgiving, Black Friday, and Christmas and New Year’s fast approaching, now is the time when many businesses, such as retailers and wholesalers, are gearing up for the busiest period of their year.  A person holding a calculator and a calculator  Description automatically generated with low confidence

If you’re in an industry that does much of its annual trade towards the end of the calendar year, you must ensure your cash flow is robust enough to handle adding much more inventory. 

If you’re like many entrepreneurs, you need to secure a business loan of some type in the coming months to see you through the holiday season and ensure you maximize sales and profits. If so, do all the right things to get a loan approval as quickly as possible. 

Sort Out All the Paperwork 

Before you start filling out application documents, get all the necessary paperwork you’ll need to include with your loan request ready. If you don’t already utilize a comprehensive treasury management tech system, it pays to use one, as the software can help you keep track of and manage financial data. You need to have a clear understanding of your organization’s cash flow situation and see, at a glance, your main fixed and variable expenses. 

To apply for a loan, you’ll need to present things such as profit and loss statements, balance sheets, proof of business assets and liabilities, and financial projections. Most banks and other lenders will require at least two or three years of tax return and bank account statements, too. Plus, you may need to provide details relating to your personal situation, like tax returns and bank account info, depending on your business structure and how long it has been running, the industry it’s in, and sales levels. 

Research Lenders and Loan Types

The next step is to find out which loans you might apply for. Research many lenders and their products rather than just contacting the bank you already deal with or the lender located close to your home or office. You want to submit an application that best suits your current situation and loan needs for the best chance of having a loan approved quickly and getting the best deal. 

For example, you might require a short-term loan to deal with cash flow shortfalls during the holiday season, or you might want a longer-term loan so you can cover the Christmas period plus also upgrade equipment or invest in new premises, etc., in the new year. 

When researching lenders, be open to going beyond the traditional banks. There are many lender types in the market now, such as boutique firms that operate online only, companies specializing in servicing particular industries, and other niche players. 

Check out the terms and conditions plus rate options from many different lenders to find ones with great deals for what you need and who seem most likely to approve your application. Remember that it’s not just about the interest rate you’ll pay, either, but also having the ability to pay loans off early, having access to online banking and other benefits. 

Update Your Business Plan

To give yourself the best chance of loan success, update your business plan, or create one if you’ve never done that before. Most financial institutions ask to see a comprehensive plan to get an idea if you’ve thought through how you will effectively spend the loan dollars and keep building your business. 

They want to know that enough thought has gone into your planning, that you’re prepared for what’s to come, and you’ve done your research on the target market and your competitors. Show how you’ve considered potential threats to your firm, weaknesses you need to get around, and opportunities to pursue, too. 

A business plan will help show you can pay back a loan on time every month. Plus, the document should detail what exactly you’ll spend the loan money on and how this cash flow injection will bring in more revenue and profits. For instance, demonstrate how the loan will be used to stock up for the busy Christmas trading period and hire more casual staff for that time. Include financial projections around what kind of sales you think you’ll do in the coming months, too. 

Don’t Apply for More Money Than Needed

Lastly, to get a loan secured more quickly, don’t get greedy when requesting funds. Only apply for the amount you truly need to see you through the Christmas shopping season and beyond, as necessary, since the lower the number you apply for, the more likely it is that lenders will think you can repay it.  A person writing on a piece of paper  Description automatically generated with medium confidence

We must take advantage of the busy times of the year, especially after challenging periods like the global pandemic. Securing a loan for your business can help you maximize sales and profits and help ensure your venture is around for the long term.

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