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How do I… develop financing?

Get a business loan to fuel growth

Are you looking to finance your business with loans or lines of credit?

Whether you’re starting a new business or expanding an existing one, financing is essential to long-term success. But the world of business financing can feel like a maze, especially when you hear terms that might not be familiar, like small business loans, development loans, lines of credit and term loans.

So, how do you go about securing financing for your business? Who do you talk to? And how do you know which business loan is right for you?

Consider your goals

The first step to securing financing is to understand what you need. Ask yourself the following questions:

  • What are my short-term goals?

  • How will I use the money?

  • Do I have the necessary collateral, such as a property or other assets?

  • What kind of business loan would best meet my needs?

  • How long have I been in business?

  • How strong are my finances right now?

  • What is my credit score?

  • Do I have any other outstanding loans?

Understanding why, how and when you’ll need extra money sets a strong foundation for your repayment process. Plus, you’ll avoid taking out too much or too little, by planning your loan strategy in advance.

You may also want to consider whether you're looking for short-term or long-term loans. Consider the interest rates and repayment terms you can safely carry. Loans are a form of debt, so don’t take them on if you won’t be able to pay them back.

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Identify potential sources of funding

Once you've answered the above questions, it's time to explore potential sources of funding. Depending on your needs and goals, different types of business loans may be better suited for you.

The following offer varying business loans and financing options:

  • Banks and credit unions

  • Online lenders

  • Venture capitalists

  • Business incubators

  • Government grants and programs

  • Angel investors

Once you know what you need, do some research. Ask them what types of business loans are available for you, what the terms are and if there are any special requirements for applying.

If you’re taking a loan from a non-traditional lender, like an angel investor or business incubator, make sure you know what the repayment terms are. Not to mention, if you need to give up business equity (a stake on your business) in order to get the loan or investment.

Choose a loan

Next, consider the type of loan you want to apply for. A business loan, for instance, can be a great way to upgrade technology or expand operations. On the other hand, development loans are often used for longer-term investments such as property or building renovations.

If you are looking for short-term financing, consider a line of credit. With this type of loan, you can access a pre-determined amount of funds as needed. Plus, you only pay interest on what you use.

Term loans are also an option if you need to purchase or expand quickly. With a term loan, you receive a lump sum of money that will be paid back over a set period of time. Term loans offer fixed or variable interest rates, meaning the rate changes with the market—variable rates are higher risk and thus are typically lower. Talk to your financial advisor about what kind of interest rate is best for you.

Explore business loans

Here are five ways to find the right financing for your business:

  1. Compare loan offers from different lenders to find the best rate
  2. Maximize your credit score by paying bills on time and reducing debt
  3. Look into government programs that can help finance your business
  4. Consider applying for a small business loan from an online lender
  5. Seek out angel investors or venture capitalists interested in investing in your business

Understand the terms and conditions

Loans are a form of debt. So it’s important to know what you’re getting into.

Before you commit to any loan, ensure you fully understand the interest rate, repayment schedule, fees, collateral requirements and other terms and conditions. Take time to read the fine print and ask questions if you don't understand something.

If you need help, speak with a financial advisor or loan broker who can explain the terms and conditions in plain language. The more you know, the better set up you’ll be to repay your loan and grow your business.

Speak to an advisor

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Set a repayment plan

Finally, it's important to develop a repayment plan. How much money can you realistically pay each month? Are there any prepayment options available? Answering these questions in advance will help ensure you can meet your loan terms.

Be sure to factor in additional costs, such as interest or fees. Wherever possible, set up automatic payments to make sure your loan payments are made on time.

Use our business loan calculator to see exactly how much your monthly payments will be and how long it will take to pay off your loan.

Apply for funding

Once you've identified the loan that best meets your needs, it's time to apply. To do so, you'll need to provide some basic information about your business and finances. This includes income statements, balance sheets and cash flow statements.

You'll also need to provide personal financial documents such as tax returns, bank statements and pay stubs. Make sure you have all this information in order before submitting your application.

Once you've completed the application process, wait for a response. Depending on the type of loan you applied for, it can take anywhere from a few days to a few weeks to hear back.

In the meantime, make sure to monitor your credit reports for any changes or errors. You can also reach out to lenders if you haven't received a response after an extended period of time.

Need help applying for a business loan?

We help businesses of all sizes secure the capital they need to succeed. From development financing to commercial lending, our team of experienced loan specialists is here to help.

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Get advice on the go

Life gets busy, but don't let that stop you achieving your goals. Whether you’ve got $50 or $50,000, we want to help power your possible – and we'll come to you to do it.

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Let’s keep boosting your business financing know-how

Grow your business with Gulf & Fraser

Business loans aren’t the only way to grow your business. Explore our full range of business growth services, designed with success in mind.

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