From March 6th Amazon will act as a platform to connect sellers with other lenders, rather than being a lender itself. Those seeking fresh capital to meet everyday opportunities and challenges will have to look for funding outside of Amazon. Make sure you do your homework before you apply!
💷 Know your Numbers
Before you apply for a loan, you should know your current financial position. Is the financing for a short-term cashflow need, or are you looking to fund a long-term plan? What is your projected cash flow and ability to make repayments?
💷 Know what you need the funding for
Its best to know exactly what you will spend it on. You could get really excited when the money comes in then splurge on something that suddenly seems REALLY important (but is not!) You also need to put the money to work immediately to start earning itself back.
💷 Know what options are out there
When you’re applying for a loan, you should always compare offers from multiple lenders to find the best rates and terms on your loan. There are a number of alternatives available such as crowdfunding, alternative business loans and peer to peer loans. Banks are a good option, thanks to low rates and flexible repayment terms. Another option is to apply for a loan through a lending marketplace although your rates may be higher than what you’d receive with a bank.
💷 Know What Lenders Are Looking For
It helps to know your lender's criteria. Some will consider your personal credit score as well as that of the business. In addition to having good credit, lenders want to see signs that your company is growing. And will want to see that your business has sufficient cash flow and assets that can be used as collateral.
💷 Know whether the Lender is familiar with Your Industry
Many lenders specialise in working with companies in specific industries, and some have industries they won’t work with at all. You want to look for a lender that will be able to help you, so asking for this information up front will keep you from wasting your time.
💷 Know the Terms
The interest rate on your business loan is important, but it’s far from the whole story.
- What loan term is the lender willing to offer?
- What percentage of the cost of your asset is your lender willing to finance?
- What is the lender’s flexibility on repayments?
- What guarantees are being asked from you in the case of default? Do you have to pledge personal assets?
All said - borrowing is a great way to fund your growth. A loan can give you access to the cash you need to pay that VAT bill, keep operations afloat or accelerate your company's growth. Just plan ahead, stay in control, and know what you're doing!
