Planning Your Business Loan Application
Why use Gold as Collateral for Loans
Planning a business loan application is the first step towards the realisation of the vision of your business. While it’s an exciting step, and one to be applauded, it’s also quite a daunting one. So how do you do it? And what do you need to know to have a successful business loan application process?
What Lenders look for?
Depending on if it’s an established or new business the specific requirements will differ to a small degree. However, the basic principles and requirements are mostly the same.
Those providing business loans want to know why you think your business will succeed. How you plan on generating revenue and who your target market is. They also want to know what the expertise of those running a business are. This gives them an idea of how likely the revenue expectations actually are. As well as if the money lent to a business will be well managed.
Lenders want to know the Viability of a Loan and thereby Calculate their Risk of Lending Money
One of the advantages of going through this process is that you are also creating a business plan for yourself. Essentially, a loan application process takes an idea and step-by-step plans how it will come about. It can then be used to guide and help forecast the trajectory of your business. Additionally, it provides a way to measure the success of your business once you are operational.
What does a Successful Business Loan Application Include?
Business loans in South Africa, require you to provide specific information. This is known as a business plan. Below is an outline of what you could be expected to include within your business loan application.
Business Loan Application Checklist:
- 1. Cover and Contents Pages.
- 2. Executive Summary.
- 3. Company Description (Mission statement, values, principal members & legal structure).
- 4. Management Structure and Organisational Overview (eg: Organogram and salary forecasts).
- 5. Company Structure.
- 6. Business Product or Services (What you want to do).
- 7. Market and Sales Plan (Who your target market is and how you’ll reach them).
- 8. Financial Analysis (e.g.: Proposed budget and revenue projection for 3-5 years).
- 9. Funding Request.
- 10. Appendix.
Remember, points 2 – 9 should be focused and highlight pertinent information. The appendix is where additional information and supporting documents, in relation to these points, are found. Within a post covid environment, you may also need to provide a covid health and safety plan. If relevant, this would include the wearing of safety gear and sanitisation stations or fogging plans.
An Existing Business should provide Historically Relevant Information within their Business Plan
How long is a business loan term? A business loan term is determined by the terms & conditions (T&Cs) of a successful loan application. The T&Cs will also dictate how the money will be paid to you. If money is to be paid in tranches (instalments), then they will also outline the requirements for this to happen.
Secured and Unsecured Business Loans in South Africa
A secured business loan requires you to attach assets to what you borrow. This means that if you miss or can’t pay your loan instalments, the lender can seize these assets. They will then use them to cover your debt. For the lender this decreases the risk of loaning you money. For you, it could increase the risk of a business loan. It also means that you know upfront what the consequences of defaulting on loan repayments are. An unsecured loan requires no assets to access the loan. Two of the most common types of loans, which don’t require security, are student loans and credit cards.
Collateral Cash Loans
Collateral loans, such as a Gold & Gold Jewellery loan, are loans that require you to provide an item of value to the lender. The lender will have specific requirements for a collateral cash loan. These relate to the collateral item and usually a business plan is not required. This also means that those with bad credit or who are blacklisted are eligible for consideration of a collateral cash loan.
Business loans, such as those available through Coughlans, are not subject to a waiting period. Therefore, they are a way of accessing a quick business loan. They have easy loan terms and all information relating to payments, instalments and interest rates are provided upfront. Coughlans believes in transparent and affordable loans. And has over 110 years’ experience in providing personal and business loans.
Contact Coughlans today or visit one of our stores to enquire about accessing a loan for your business.
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