6 Tips to Get a Cash Loan for Your Business

 Owning your own business is a dream for many people. Unfortunately, a business requires significant capital to run smoothly. Without capital, business development is hampered because promotion and innovation require significant funding.

Fortunately, funding can now be obtained from various sources, including banks, cooperatives, investors, and even online financial platforms. Simply choose the one that's most secure to ensure your business continues into the future.

6 Tips to Get a Cash Loan for Your Business

6 Tips for Getting a Cash Loan for Your Business

Regardless of the amount of capital you need, you can get your application approved by the bank by following certain tips. Some of these tips include:

Selling Personal Assets

Having assets with high resale value is an advantage, especially if you need capital for your business. You can sell personal assets for a certain price and use the proceeds to rent a building, produce products, or even promote your business.

Personal assets can include houses, land, vehicles, gold, jewelry, branded goods, and electronics. If you don't want to sell them, you can pawn your personal assets at a pawnshop and redeem them later to reclaim them.

Develop a Business Plan

A plan is a crucial guideline for running a business. In this plan, you can outline your business objectives, vision, mission, product types, target market, promotional methods, and services to be provided to consumers. Don't forget to create realistic financial projections, such as estimated capital, expenses, and expected profit targets.

The bank will then assess the feasibility of this business plan. If the plan is comprehensive, attractive, and convincing, the bank will be happy to approve your loan application. This is because the bank itself is confident that your business has the potential to be profitable.

Determine the Right Type of Loan

There are various types of loans you can apply for to obtain business capital, including bank loans, non-bank loans, and online financial platforms. Each type of loan has advantages and disadvantages that you should consider before applying.

For example, if you need a large, low-interest loan, a bank loan is the right type of loan. If you need a quick loan, apply through an online lending platform. Unfortunately, online loan interest rates are quite high, so you should consider the interest before applying.

Improving and Maintaining Your Credit Report

Your credit report is one of the factors that determines whether or not a loan is approved. Lenders will usually check your credit report first. If your credit report is good, you can get a cash loan for your business, and vice versa.

A good credit report is influenced by several factors, such as:

Past debt repayment accuracy

Possibility of bad debt or default

Loan term

Total past loans

To maintain a good credit report, make sure you pay your debts on time. Pay attention to your installments, even small amounts, to avoid delinquency.

Prepare Important Documents

Applying for a loan to a bank usually involves a series of steps. One of these steps involves submitting the necessary documents, such as your identity card, Taxpayer Identification Number (NPWP), business plan, financial statements, copies of savings account statements, and other documents.

Each bank has different requirements. Make sure you understand all the requirements so you can prepare the documents promptly. This will ensure your loan application is approved and you can use the funds to start your business.

Take Advantage of Government Loans

The government is currently implementing a loan program that people can take advantage of to start a business. The program is called the People's Business Credit (KUR), which requires no collateral. Through this program, the government hopes to increase the number of MSMEs and encourage them to develop their businesses.

To obtain a loan, the government requires you to have a certain amount of savings according to the scale of your business, namely:

Micro-business owners have assets of IDR 50,000,000

Small-business owners have assets of IDR 50,000,000 to IDR 500,000,000

Medium-sized businesses have assets of IDR 500,000,000 to IDR 100 billion

Tips for Maximizing Loan Fund Management

Good financial management provides distinct advantages for future business continuity. Follow these tips to maximize loan management.

Have a Mature Financial Plan

The first tip is to have a mature financial plan, including a detailed budget and expenses. Calculate your total current capital, then compare it with your total expenses. Ensure your capital exceeds your expenses to anticipate unexpected costs during your business journey.

Be sure to include installments in your financial plan to anticipate late payments. A penalty will be charged on your next month's installment if you are late in making a payment this month or last month.

Allocate Funds According to Your Purpose

Next, allocate funds according to your predetermined purpose. This is crucial to ensure the funds are used for your needs, not for anything unrelated to your business.

If the purpose of using the funds is for business capital, then use them for business-related matters. This includes developing your business so it continues to grow to its desired level.

Creating Financial Records

For business owners, financial records are an element that should not be overlooked. Financial records contain the overall financial history of the business, including total income and expenses over a specific period. The points contained in the financial records can be used as evaluation material for the future sustainability of the business.

Financial records can also serve as reports if you want to seek investors or apply for a new loan from a bank. Therefore, prepare your financial reports as well as possible. Be detailed and organized so that those viewing them can easily read them.

Avoid Creating New Debt

If your installments are outstanding, avoid creating new debt. Adding debt can increase your financial burden. If you're not prepared, previous debts will become difficult to repay, ultimately leading to bad debt.

When your credit is bad, your credit score automatically decreases. As a result, your potential for obtaining new loans in the future is reduced. Imagine if you need capital to expand your business and your loan application is not approved, your business will stagnate temporarily.

Consult a Financial Expert

The final tip is to consult with an expert, namely a financial expert. Many institutions and companies offer paid consulting services. Simply choose one that best suits your needs and budget.

Consulting with a financial expert will provide you with new insights on how to manage your capital wisely. They may also provide you with specific tips and tricks to ensure your financial well-being for years to come. This way, your business journey won't be disrupted and you can continue expanding, ensuring your business grows according to your initial expectations.