Maintaining a consistent cash flow is a real challenge whether you are a start-up or an established business. Sometimes, you may find your business running out of cash for one reason or another. Insufficient cash can bring your business operations to a halt, but fortunately, you can easily deal with this problem with the help of small business loans in Ireland.

Qualifying for a small business loan is not the same as that for a personal loan. The approval criteria for start-ups and established businesses are different. Further, lenders do not seem to be flexible with their lending when it comes to loaning you for your business. They involve a huge risk, so they would carefully look over the prospects of your profitability in years to come.

Ways to qualify for a small business loan for start-ups

Start-ups have to jump through hoops to get the nod because they are looked at suspiciously about their repaying capacity. You may also have to undergo extra formalities compared to established businesses to get approval for your loan request. Here are the ways to have your lender approve your business loan application:

  • Draft a business plan

A solid business plan shows the prospects of your success in months to come. A lender would like to know:

  • what your business is
  • who your target audience is
  • and what marketing methods you will use to reach out to your customers

Make sure you have succinctly mentioned all these details.

There are several online templates you can use to create a business plan. The ultimate goal of your business plan is to win the trust of your lender.

  • Secure your loan

Although your business seems to have the potential to make profits, a lender needs more than the projections to ensure that you are not a bad borrower. As you are looking to fund the initial capital of your business, your lender would prefer some sort of security.

You may have to put down collateral. The worth of your assets will be more than the size of your loan. If your business fails to take off, your assets will repossessed by your lender to recover their money.

  • Keep your personal credit report in good condition

You have just stepped into the business world, and therefore, your business credit history will not exist. Lenders peruse a business credit report to see how much money you owe and your previous payment records. But in the absence of your business credit file, they will use your personal credit report to see if you can repay your debt along with other obligations.

A good credit history can help you easily get approval for your business loan. A bad credit rating can get in your way. Improve it by paying off bad credit loans in Ireland. Make sure you do not owe any amount at the time of filling in the application for a business loan.

Ways to qualify for a small business loan for established businesses

Established businesses do not have to face a lot of challenges as start-ups do because lenders can gain clear insight into their profitability. Still, it does not exempt them from passing the difficult criteria:

  • Have a good business credit file

Your track record of previous payments will be taken into account. Despite a good business credit rating, you may face some difficulties. That is because of high indebtedness. In addition, your lender will examine your personal credit report. You should keep your personal and business credit files in good condition to increase your chances of approval.

  • Have a lot of assets

Your lender will look at the proportion of your assets to your liabilities to get an idea of how well-off you are. Established businesses do not have to secure their small loans for business unlike start-ups. Since the risk is still high, lenders want to see whether you can pay it back on time in case of unexpected events.

  • Have an alternative repayment plan

Some lenders might ask you for an alternative plan if the project fails for which you are borrowing money. You must be able to clearly tell them the repayments you will make in the absence of enough profits.

Established businesses have more financing options than start-ups

Start-ups may not be able to use all types of financing sources available with lenders. As the lending decision depends on your business plan, you will be eligible for only small business loans.

However, established businesses can choose to have a variety of financing options, such as:

  • Business credit cards

They are good for day-to-day business operations. You can also choose a line of credit. You will pay only interest on the amount you use. Once you pay back the balance, you are free to borrow that money again as and when you want.

  • Invoice financing

It can help you fund your unpaid invoices when you need urgent cash and invoices that are not yet due for payment. You do not have to pay interest because an invoice financing company will charge fees for their services. It is a good way to fix your cash flow problem.

  • Overdrafts

Overdrafts are expensive as they will charge daily fees unless you pay back the amount to your business’s current account, but they help meet small business operations when cash is tight.

To wrap up

It is not so easy to get a small business loan in Ireland because you will have to submit a business plan. You may have to secure it as well despite a smaller sum. However, these conditions are not applicable to established businesses. They need to show their strong profitability and assets.

Established businesses can use multiple financing solutions. Do intensive research to understand which one suits better your financial condition. Business loans are very expensive. Make sure you generate enough profits to keep up with payments on time. Otherwise, it will affect your business credit rating.

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