Five Steps for Applying for Your First Business Loan

Applying for a business loan can be a daunting prospect. While you no doubt, have a very clear plan of your business in your head, trying to substantiate an unproven concept to a stranger can be difficult. Particularly if that stranger is slightly skeptical and keen on exploring your ideas in the finest detail.

Thankfully, there are several straightforward measures you can take to convince a prospective lender to give you the much-needed financial support you need. One great way to obtain the funding you need is by turning to online lenders like Kapitus. Whether you’re just starting or are looking for funds to expand, the fundamentals remain roughly the same.

Prepare a business plan

As with most things in life, preparedness is the key. If you do a little background work, achieving funding will be considerably easier. Online lenders like are more than willing to help good business ideas get off the ground however the onus lies with you to prove your idea is worthy of their backing. 

Step one – and probably the most important thing you can do – prepare a sound and structured business plan. There are multiple resources online to help you in the process of writing a business plan; however, as a basic guide, you will need to provide:

  • An executive summary – an overview of the company
  • A company description – who you are and what you do/intend to do
  • Market analysis, i.e., research into the existing market and competitors
  • Management and organization – how the company is to be structured
  • Details of your service or product – an in-depth look at the product or service you provide/will provide
  • Marketing and sales approach – how you intend promoting the company
  • Details of the funding you need – the investment you hope to achieve and how you’ll use it

It’s highly likely you already have most of this information in your head; however, you should detail it in writing before your loan meeting. Winning an investment will be based in large part on your ability to give sound reasoning to each of the above points.

Prove there’s a market for your business or product

Probably the most significant consideration a lender has when looking at a business loan application is the viability of the company and its chances of success and growth. You should prove there’s a market for your concept and that it can make money.

Unless your idea is completely original and you are first to market (i.e., nobody else has done it before), you will likely be able to use examples of other similar companies already operating in your area. One of the best ways to convince an investor in the viability of your company is by demonstrating the success of others – though, of course, this also means you need to demonstrate how you intend to survive alongside these competitors.

Identify how you’re going to find and connect with potential clients

You need to have a very clear plan of how you’re going to connect with new clients and build your business. A lender will want to see a clear path for the development and growth of your business – a defined sales strategy is central to that.

Research existing companies and see how they operate. While this isn’t exactly the most innovative approach, it will nonetheless give you solid ideas about how to structure your marketing.

Prepare a SWOT analysis  

SWOT stands for Strengths, Weaknesses, Opportunities (and) Threats. Showing a prospective lender, a SWOT analysis will let them know you have a clear and thorough plan for how your business is going to operate in the real world, against competitors, and other potential risks.

A SWOT analysis also presents the ideal opportunity to show your company’s potential growth by identifying its strengths and the opportunities which exist in its particular market.

Identify your USP’s

All companies need to have some kind of USP (Unique Selling Point). By showing a potential lender, your company is unique in some way – or can bring something exclusive and distinct to market – you’ll go a long way to convincing them to lend you the money to start the ball rolling.

To stand the best chance of achieving business funding, you need to prove to a lender that you have a viable, well-thought-out, sustainable business model that is safe to invest in. If you do, most backers will happily fund your venture, allowing your business to grow far quicker than would otherwise be possible. The key is all in the preparation.