Finding a business loan with high approval rates can be difficult, especially because most lenders for business are really based on a venture capitalist model. Venture capitalists usually only take offers where than can reasonably see a 5X return on their money within 2 to 3 years. This makes things difficult to impossible for young fledgling business’s. High approval rate business loans can be a difficult fish to catch for an existing business much less a young business. Business lenders want to see numbers most young business just don’t have.
Why do new business have trouble finding loans.
Young business have little to no track record. Young business’s are volatile and unpredictable this makes for sour grapes for lenders. Lenders want a sure thing, lenders wants profits and stability. Business’s that have proprietary technology or patents have some leverage they have established value even without a record of profits. Sometimes a patentable idea or difficult to replicate pieces of tech or software can give a business value even without profits. Sometimes if a piece of intellectual property or a patent has enough value lenders are willing to offer financing just to bring it to market. However if you have a more traditional business like a restaurant or online startup there’s really nothing you have to leverage but pitch.
How important is a pitch?
Developing a pitch is a complex process and can even be considered an art. Many bad ideas have had allot of money thrown at them because of a good pitch. If your ideas good or great you already have a big advantage. How if you had complete proof of concept, a working business producing good profits you wouldn’t be looking for a loan. You need a loan to get your business where it needs to be. However, the layman knows not what big capital needs to see to open their pocket books.
Framework for developing a good start up business loan pitch for investors
A business loan pitch should show value
Show value doesn’t mean how your going to make money but what makes you different. In any business theres competition there’s 10 – 1 million other business do exactly what your doing or something similiar enough to branch out into this market. Even if you have 0 competition now if a corporate giant see’s what you doing an likes it they have the funds and the capital to crush you. They will then absorb you market share and small business cannot compete with an easily replicated business model.
If you want a loan for you business show lenders why your different
That’s what they want to see! What do you have? What does your team have? What can you do or offer or accomplish the guy down the street with more money in his pocket already can’t? That’s the big question what’s you X factor, Mark cuban call it “Special Sauce”, but basically it’s what do you bring to the table that NO ONE else does?
If you can answer that or at least pitch why your different or better down the line you’ll have problems.
A business loan pitch should show progression
Where are you now? Where are you going to be in 6 months, 1 year, 5 years etc. How are you going to get there?
This is the where’s my money going question. They want to know exactly where every dime is going and how that’s going to help grow your business. “Give me 50K and we’ll make a million by year 2” or any variation of that is fluff and garbage. That means NOTHING to a lender, and I mean nothing at all. You need to show them itemized description of the use of their assets, predictions on what that investment will do for your business, and back it up with some type of legitimate facts or figures.
A business loan pitch should show $$$
When and how are they going to get their money back? How much more are they getting back to take this risk that’s the end all question. Have a plan and a detailed outline of how you’re going to pay them back whether it be installments, equity , etc but have a solid plan. Also when? If they have 30% equity but you never sell or IPO that equity is locked up in your company set a schedule of repayment make the deal sweet for them.
There are no sweet heart deals in business lending for unestablished business’s period.
They do not exist, you are going to take a little loss on this in the long run. However, the funding now when its crucial can really make or break a young business. Over 90% of young business’s fail the main cause of death? Underfunding! Take the money and run, but show them how it benefits them to partner with you. Think from the other side of the table!
So who can help me get a high approval rate business loans?
There is an application on the upper right hand corner of the screen, fill it out, we’ll call you pre qualify you and help you find the right lender for your business. Many of our clients don’t even need to do the pitch aspect it may be skipped completely or in certain case’s we may handle it for you!
As always our loan placement service are 100% free so apply now at the upper right hand corner.