How to Get a Small Business Loan

When you’re trying to start up as small business, finance is a topic that might cause you, when at family parties, to be probed by your parent’s friends asking how you’re funding the project. In these instances, we advise you to avoid screaming and calmly take yourself over to the bar/punch/corner of the room where hip flasks aren’t frowned upon and take a minute (and several shots if necessary).

Whether you’re struggling to obtain a loan or you’re baffled by the mountains of forms, try not to panic. There are certain things you can do to optimise your business for a loan – whoever you’re asking for the money from. Get your pitch watertight and you won’t need to fret.

Business Plan

Every start-up should have a business plan that they can recite on request. However, not many have a great business plan. The more information you include, the more realistic the plan becomes. Be detailed, precise and knowledgeable about exactly what you want to achieve in your plan, and how you imagine your business becoming successful.

How you deliver the plan is also vital. If your prospective lender loves everything about your business apart from your execution, there could be a problem. Make sure you are interested in your own plan. It’s natural to seem nervous, but it won’t do you any good to seem bored. Deliver your plan with enthusiasm to get others interested in the project.

Know Your Figures

There’s nothing more cringe worthy than a pitch where the figures are completely off. If your interviewer trips you up, or you get a phone call with some questions about your application, you could be in trouble. Not looking professional is one thing – you can wear the heck out of a Gucci suit and Armani shoes – but fumble or look baffled for even a second and you’re going to fall into the  fiery pit of no business loan land.

You’d really be better turning up in a pair of dungarees, covered in mud and holding a trowel, then proceeding to pitch your gardening business with all the correct figures. The main takeaways that lenders will have is your excitement for the project and the numbers.

Show Your Leadership Skills

When applying for a loan, you need to show lenders that you are capable of running a business, as well as leading, and motivating, a team of people. If you can’t do this, then you should re-consider your choice to start a small business where you’ll need to make a lot of decisions and quick business choices.

If you’re afraid to show leadership skills in a situation where you are the one asking – don’t be. As long as you are tactful and don’t speak down to the lender or try to fire them, then it should go well. Maybe take a hopeful employee in with you to give you a hand with your pitch, or express how your figures were part of a team effort. Every lender will know that a good business requires a good leader; you should stress that that’s you.

If Approaching a Bank

There are plenty of different kinds of lenders that you might be interested in trying. Alternatively, there might be one you know will love your company and has the right dynamics for you. Whatever your approach, you should tailor your pitch specifically for the audience.

If you’re thinking of borrowing money from a bank, there will be a regimented procedure everyone has to follow. There will also be thousands of other applicants who were in your exact position, and have given the same exact pitch. When you’re completing these kinds of applications, you should grasp any opportunity to inject a little bit of your business and its personality.

We don’t mean that you should enter your first meeting by flinging open the doors and bursting into song (no one wants to be that kind of memorable). What you could try is a different way of conveying ideas – maybe use visual aids and a few light-hearted jokes to make a good impression. For many bank lenders, the more professional the better, so keep your etiquette at all times.

Private Investor

If you’re planning on borrowing money from a private lender then things could be a bit more relaxed. You might not be required to suit up for your meeting, but you should go that extra mile with your information. You might think you have it all planned out, but what would your business do in the event of a flood? What would be your first actions if your employees planned a strike? Who would you call if a stray dog happened to wander into your business?

Private investors may need more assurances with banks, and you should be ready for any question that they may fire at you. As far-fetched as it may seem it is their money they’re investing, so they want a water-tight prospective business investment that will guarantee some kind of return.

Small Business

If you’re applying for a loan from a small business, they will know the ins and outs of how it works (which means you should too). These might be the ones who know straight away whether they want to lend, as they’ll know markets and whether your business would be successful.

Although this can seem daunting, it can actually work in your favour. A small business will be on your side and able to offer some advice in times of crisis – but more importantly they will be more emotionally invested in the business, which as cruel as it may sound, you can play on. Point out similarities in the business to keep them interested and never miss an opportunity to connect with them and other small businesses in their network.


Creative businesses are the ones that tend to prosper on sites like Kickstarter and Crowdfunder. The crowdfunding sites are a new take on the business loan, where prospective purchasers are the ones deciding whether they’d like to buy a product. If they would, they can place a pledge to get it into production.

Yet another way you could get a loan for your small business would be to raise the money through crowdfunding. For many this is a relatively new way of raising money for a project, but one that has blown up in the last few years. There are only certain business types that fit into the crowdfunding mould and work well, so if your business does, it is worth considering.

Are you in the process of applying for a small business loan? Or have you just acquired one? Let us know and leave a comment below!

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