Is new business finance easy to come by?
Access to funding for new business is important as a business of any size and in whichever industry needs financial stability to operate sustainably. But it’s not that simple as accessing finance proves to be one of businesses greatest obstacles.
There are difficulties with accessing new business finance for a number of various reasons such as.
Lenders evaluation of your business
When you apply for a loan lenders will not grant it if they see issues. Like too low price mark-up then a business loan will probably not help you resolve them. If you want to increase the sales of your business, you have to take into account profit margins and efficiency and prepare a long-term plan for growth. This is the only way in which you can obtain finance.
Put your money where your mouth is
As additionally, the financial institutions would like to see that you’ve already invested in growth yourself in order to support you. And in such instances most investors want to see that you have money on the line as well. This ensures that you’ll be especially motivated to run the business well so you won’t lose the funds you’ve invested. As you have to know that lenders assess risk very carefully and generally have very low risk tolerance.
When your debt issues come back to haunt you
If you’ve had some debt issues in the past, you’ll automatically get rejected for a business loan. The banks and other companies providing business finance are traditionally risk averse. They grant funds only to businesses which have an extremely low risk of not repaying the loan. At the same time, most of the small, micro and medium enterprises don’t fall into the low-risk category.
There’s a lot of paperwork involved in applying for a business loan and it usually takes three months for a company to obtain the funds after having applied for a loan. This isn’t to say that it’s impossible to obtain finance. You just have to be aware of the challenges which you’ll have to overcome.