Now that your business is thriving, you may be looking to expand. Unless you’re coming in with an abundance of cash, chances are you’ll need funding. This is where a business loan can come in quite handy. As a young business, you may not know where to look next for funding. Investors and lenders can not only offer money, but guidance and advise with the knowledge they bring to the table. 

It is important to know when to start looking for funding, as well as where to look. Having a set plan will help to support your loan purpose in the long run. Here are some common mistakes to avoid when seeking a business loan. 

Have a Clear Plan

Unless you have a bank account balance with six digits, you will need to have an exact plan as to how you will use your business loan. If you plan on taking out a loan, you need to come up with a specific purpose for the money. Whether you want to expand your business or increase your inventory, you’ll need an exact reason to take out a loan. Your business should be in good standing, and you as the CEO should be able to provide documents to prove it. 

If your business is thriving, consider meeting with a business loan consultant to increase your odds of getting approved. The loan consultant with assess your business’ performance to help you achieve your funding goals. Their team will eliminate any added stress that comes with the process of applying for a loan by setting you up for same-day business loan approvals. 

You should also consider introducing different marketing techniques into your plan. If you can apply the right tools, you will see the best return on investment (ROI). For example, launching a website into your business plan is an excellent idea. Only a little over 25% of small business owners have a website where customers can actually purchase their goods or services. 

Choose the Right Lender

Because there are so many options for acquiring business funding, it is important to research what each lender has to offer. If you start by choosing lenders that have already invested in companies that are in your industry, you will increase your odds of getting approved. This will substantially decrease the amount of time you spend searching for a loan. Different lenders specialize in specific industries, so take the time to narrow down the ones who can help. 

Not only do you need the right lender, but you also need the right type of loan term. There are short-term and long-term business loans available. Short-term loans generally come with higher recurring payments, but the total cost of the loan is typically lower. Whereas a long-term loan comes with lower recurring payments, but because of this, the interest accrued will lead to a higher total cost. To avoid ending up in debt, you need to have a set plan to pay back your loan before you even apply for it. 

Don’t Wait Too Long 

If you don’t know when to pull the trigger, you may end up with a less than ideal situation. Because applying for funding can be a time-consuming process, you’ll want to be ahead of the game when you decide to seek funding. If you wait too long, your company may run too low on funds to earn a loan approval. You want to apply for a loan while your finances are still in good standing. 

 It is always a good idea to do financial forecasts for your business. This way you can stay on top of your financial game. By looking at when your business performs best, you can get a better idea of when you’ll need to seek additional funds. You’ll learn exactly how much is needed to get you through those tough times. And remember to never take more than you need.

Value Your Business Appropriately 

When you’re trying to secure a business loan it is extremely important to know your company’s value. You don’t want to sell yourself short, but at the same time you should be careful not to overvalue your business either. Understanding how much you will need, to successfully run your business, should be done by calculating your desired profit margins. You should come up with values that will provide a enough profit. And this should be done for every service or product you offer. 

One of the most common mistakes a small business can make is not setting their prices high enough. You should look at other businesses in your industry to get an idea of where to start. If you’re inclined to lowball your competitors, don’t! This may seem like a smart strategy to attract customers, but you will end up falling short with too low of a margin.

To Wrap Things Up

With all this great information, applying for a business loan should be much easier. If you’re unsure of where to start, consider talking to a business loan consultant. These awesome experts will relieve most of the stress when it comes to applying for a loan. Once your business is up and running, a business loan consultant will come in and evaluate your performance, to be able to give you exact funding estimates. You can use these tools that we’ve talked about above, to ensure your business won’t make the same mistakes. If you come in with a plan in mind and do your research beforehand you will find the most success with your business loan.