As a new business owner, one of the aspects that may be causing you to worry is how to persuade lenders to finance your business needs. For the lender, your business has to appear a good risk if they are to offer loans at rates that are attractive for you. This ensures that your recurring cost for the loan is kept to a minimum.
Following are some factors that influence lenders when they are looking at your business as a prospective customer:
Your credit scores
A good credit score makes you a good risk for the lender. Make sure that your creditors are paid on time always and that you have no large unpaid debts that could potentially impair your credit rating. Making payments on time consistently shows that you are reliable and can be trusted to repay loans on time. Develop a system for tracking payments and dues so that you do not miss out on any that could result in delaying the payment.
An impressive annual revenue
Your business turnover on an annual basis plays a key role in convincing lenders to offer loans at attractive rates to you. The bigger your turnover, the better your chances of getting a loan easily. Another factor here is profitability. For small architects’ firms with limited turnover, profitability is the key factor that shows the lender that you can easily afford to pay the loan back.
A sound business plan
Before they loan you money, the lender wants to know if you will use the cash responsibly. Your business plan tells them all about this, and that is why you need a watertight, well-planned, well-defined business plan that shows how you plan to use the funds responsibly to improve your business. Pay special attention to your business plan if you are going to be looking for loans soon.
Safeguarding your business
Before you take up a loan and the financial responsibility it entails, you should ensure that your business’ finances are safeguarded efficiently against risks. Apart from general insurance to protect your business, you need architects professional liability insurance to ensure that your business is not bled dry by a client who files a case against you for negligence or delayed service or faulty service.
In the event that a client does sue you for causing a loss to them in any of these ways, this kind of insurance kicks in and covers the cost of fighting a legal battle to protect your business reputation. Remember that court fees, attorney fees, and damages can result in a huge drain on finance, but with professional liability insurance, you can go right ahead and fight your case without worry because the plan absorbs all these costs. Check this website to learn more about this kind of insurance.