Acquiring a loan for a small business in Kenya is not an easy task. This is because banks are weary of the risks that small businesses are prone to compared to the large businesses. If you are considering borrowing a loan from a bank for your small business the best move is understand what the bank is looking for, so that, you are aware of the requirements and the process of application and hence get favorable results.
The following are some tips that will improve your chances of getting the small business loan.
- Prepare a great pitch in regards to your business.
The great potential of your business is only well known to you and therefore you need to be able to endorse it well by communicating it well to the person you are borrowing money from. This will help convince them to lend to you. You need to prepare a good pitch on your business and outline it competitive advantages, why you need the loan and how you intend to use the money.
- Know the qualifications required by the bank and how they evaluate businesses
The bank may want to know if your business makes money and the higher your revenue is the higher your chances of getting a loan is. This is because the bank wants to be ensured of your capability of paying them back.
Your average bank balance may also be evaluated as it shows how you manage your money. They may also want an assurance that you are capable of meeting your repayments even when sales are lower.
They may also need collateral as they are always worried what would happen if your business fails.
- Your financial documents should always be in order.
For your loan to be considered for approval banks want to see an year or two of your financial records such as, your business plan, bank statements, tax returns, financial statements, balance sheet and income statements.
- Ensure your credit history is good.
As an owner of a small business your personal credit history will also be taken into account as they evaluate your loan requirements. Always try to pay your debts as any defaults on your part may ruin your chances of your loan getting approved.
- Ask for a realistic amount for a loan
As you request for loan don’t ask for an amount that is too high with the expectations of negotiating for a smaller amount. As it is a professional institution that you are dealing with, ask what you need as a way of reciprocating the professionalism. Start with a small loan and set up a good repayment record so that you can be afforded a bigger loan later.
If everything is in order and yet your loan is turned down, try and pin point a flaw that you may have overlooked and rectify it, then wait for another opportune time and try and apply again.