It’s all well and good having a dream to set up your own business, but realistically you need the funding to get started. There are a variety of ways to go about getting this money, but a startup loan is by far the most popular. Government schemes of up to £25k can be awarded to help businesses in their first two years of trading. This can be used on a variety of items, including equipment, company vehicles, stock, cash flow, leasing an office, and marketing.
But what exactly do you need to qualify for a startup business loan? We outline some of the main factors you will need to prove in order to have a higher chance of being given a loan.
There are a few pieces of criteria that you need to meet in order to qualify for a business loan. This includes proof that you are over the age of 18 (if you are lucky to look young enough!), that you live in the UK, you have the right to work in the UK and that your business will be based in the UK. A business credit check will also be carried out and six months of personal bank statements are required.
If you want to set up your own business in a particular sector, it makes sense that you would want to do this in an area you have experience in as you already have the skills and knowledge to do the job and understand what sort of team you need to hire. An up-to-date CV with references can help to prove your track record for success.
But, even if you don’t have skills in the sector, don’t forget to mention transferable skills here too. Although you might not have direct experience, you likely have skills from other jobs that could be used in this sector, e.g. organisation, ability to work under pressure, team management etc.
Detail those who will help you
If there are going to be other people involved in setting up the business, it is necessary to provide details for who this person/people will be and their prior experience. For example, if you do not have experience in the retail sector but your business partner previously ran a local clothes shop, this can boost the chances of you getting a loan thanks to their prior experience.
A business plan
In order to feel confident that your business will get off the ground, lenders need to see where you will spend the money. It is a good idea to include all the items you will need in your initial business plan.
It can be useful to fund part of the business yourself initially as this will show lenders that you are investing capital into the business. You also need to present financial forecasts for your first two years of trading, as that is where their money is going to be spent.
Getting all of this documentation can be a time-consuming and stressful process. An experienced commercial finance broker, such as Hilton Smythe Finance, can help to take the pressure off you and to streamline the process.