Getting a business loan can be much more difficult than getting a personal loan. The reason is because many lenders are not willing to lend money to new businesses in Finland. If you’re just starting out and you need some help with funding, consider taking the following steps to improve your chances of success:
Financial Statement
One of the most important documents you should have is a financial statement. It should clearly show all your sources of income and expenses for the past year. This can help you establish that your business will indeed be profitable in the future.
The easiest way to get a decent financial statement is to use your past tax return as a template. Just plug in the numbers in each category under income and expense, print it out and you are all set.
A financial statement can help you convince lenders that you really will be able to pay them back because it shows how much money you currently have coming in and going out of your business.
Business Plan
Another important document to have is a detailed business plan. This is a written document that shows exactly how you plan to run your business in the future. It should include information on your business’s mission statement, products, marketing strategies, and goals.
A detailed business plan can convince potential lenders that they should lend money to your business because it shows that you have clearly thought everything through before getting started. It also gives them a good idea of what they can expect if they do decide to lend you money.
Financial Projections
The most important part of any business loan application is financial projections of your business’s future profits and losses. If a lender is especially interested in the future growth of your business, he or she may want to see this information. It shows how much revenue your business is expected to produce over the next five years and if it will result in profits for you.
Creative Financing Solutions
Offering creative financing solutions to hard-money lenders can be a good way to build your business’s credibility with them. This is especially important if you need some additional money very soon, such as during a period of rapid growth or an emergency situation where you don’t have enough time to wait for traditional loans.
How much time will you need to repay the loan?
This is one of the most important factors that lenders consider before they offer a loan to a business. If your business needs cash in the near future, you may have to convince the lender that it will be able to repay the loan within a matter of months or less.
It may take time and effort to find a good lender for your business. Most hard-money lenders have strict requirements and are not willing to lend money without collateral. However, you can still improve your chances of getting approved by following some tips before applying for financial assistance.
The best way to get started is by talking with friends, family members and other people you trust who might know someone who has had good experiences with hard money lenders.
When do you need the money?
Not all hard-money loans are the same. You can even see great differences between lenders. For example, some lenders will require repayment within 6 months or less, while others may give you as much as five or even ten years to pay back the loan. Finding a lender who will be willing to work with your time frame can be a big help.
What are the lender’s qualifications?
The more experience the lending company has in processing business loans, the more money they will probably be able to lend you and at a better interest rate. Look for firms that have been around for several years and that specialize in lending money to businesses.
Find the right lender.
Find out which banks are most likely to lend money for your business idea. Call them up and ask about the types of loans they offer and if they’ll consider financing your startup. Keep an eye on the competition, too. You may get better results from one bank than from another, depending on their current circumstances. When you find a business lender that seems like a good fit, schedule an appointment with a representative from the bank to discuss your plans.
Come prepared with solid information about your business plan. You want to be able to explain how you will use the funds for your company and how you will pay back the loan, so come prepared with all of this information in hand. The lender may also ask for financial statements or other documents related to your business plan. Be prepared to provide those as well.
Prepare a backup plan in case your application is denied. If you have fallen short on meeting one of the lender’s requirements, it doesn’t mean that your application will automatically be denied. Often, the lender will work with you and see if there’s a way to make up for any deficiencies in your loan application. If you don’t receive approval, keep looking for other lenders who might be more receptive to your idea, or consider taking steps to improve your business plan.
Still failing these applications? Why not try out private lenders that are more flexible, quick and governed strictly by the government? Contrary to popular beliefs, they can’t rip you off. They are bound by legal restrictions to make sure the interest rate is comparable to the industry average.
Ask about a “bridge loan.” A bridge loan is a short-term advance which gives you funds when you need them in order to meet expenses. Unlike a business loan, a bridge loan is typically unsecured, and it has no specific repayment schedule. This type of unexpected funding is sometimes referred to as an “emergency” or “cash flow” loan. While there’s no standard duration for a bridge loan, it’s often in the range of $500 to $5,000. It can last from a month to a few years—the exact period will depend on the nature of your project and how quickly you can repay the funds. Any lender worth considering will understand how important it is to you to receive funding without delay. If your project is sound and you have solid plans for utilizing the money, your chances of receiving a bridge loan will be high.
Talking with a lender doesn’t mean that you will definitely receive funding, but it’s a good start. By asking questions and doing further research before making an appointment with a bank representative, you’ll increase your chances of success. And, if you should be denied, don’t give up. There are plenty of banks who will work with new businesses in Finland. With some effort and creativity, you should be able to obtain the funding your business needs in order to succeed.
