It is no secret that successful business growth requires consistency and purposeful development without stagnation. Unfortunately, in most cases, ideas, enthusiasm, and hard work are not enough – to develop a business, it needs to be nourished with investments. When is the best time to consider the possibility of financing your activities, where to look for it, and what to pay attention to, advises the crowdfunding platform "FinoMark" in a press release.

Do we really need a business loan?

This question probably arises for representatives of every company as soon as the thought flashes that perhaps additional funds would indeed steer business development in a more efficient direction. However, considerations on this matter do not end here – many more doubts arise, such as whether a loan will further burden the current situation, whether it might be better to improve business results first, and only after establishing a more stable market position, think about the additional benefits that could be provided to clients with the extra funds.

After all, instead of taking a loan, you could sell a certain part of the company's shares and thus get additional funds. Perhaps this solution is better than becoming a debtor? However, according to Emilija Poškonienė, head of the business loans department at "FinoMark", if you decide on such a solution, you need to bear in mind that in this case, it is necessary to involve a new person or even several – shareholders – in the management of the company, which could mean more complicated business continuity and control.

Unlike selling part of the company's shares, having additional funds from a business loan can stabilize operations and initiate more effective growth – the company has the opportunity to free up its working capital and use the money for business expansion, fulfilling new orders, or purchasing goods before the season without last-minute rush.

"Companies that do not have sufficient cash reserves often have to cut costs, think only about immediate earnings, without finding time to properly develop and popularize the brand and create long-term value. Financing in such a situation allows focusing on the most important areas that would provide sustainable benefits. For example, a loan can be used to update or acquire new equipment. Using funds directed towards innovations increases competitiveness in the market and takes up a larger share of it. For this reason, a business loan can contribute to efficient and rapid company growth," says E. Poškonienė.

Decided to seek financing – where to start?

Once you decide to turn to financial institutions for a business loan, it is worth doing the necessary calculations for evaluation and identifying your plans: what is your borrowing goal, what amount is needed to achieve it, and within what period do you plan to repay the loan? Answers will provide clarity not only for those looking to borrow but also for the financial institution, which, seeing your specificity and clear plans, will view the submitted application more favorably.

After considering these criteria, you can start looking for financing by comparing conditions at least at several financial institutions. According to the "FinoMark" representative, it is recommended to evaluate possible obstacles immediately, as this will save you time. For example, if your company is still very young, first check whether the financial institution indeed provides loans to newly established companies. For instance, "FinoMark" immediately emphasizes that businesses operating for at least one year can apply to the platform.

After selecting a few institutions to which you will submit applications, you should prepare all the necessary documents for the application. This is where the process often slows down, as there are many questions about the required documents. However, E. Poškonienė assures that there is no need to worry, as financial institutions are there to help clients manage as simply as possible.

"For example, when we consider an application, we only ask for the most essential documents. Moreover, the "FinoMark" platform has a convenient self-service, where company representatives can easily fill out the application, attach all the necessary documents, and see the application evaluation stage. The platform's specialists are always ready to help, from consulting on collateral to explaining the detail required for the documents submitted for evaluation," says the "FinoMark" representative.

How to get the best conditions for a business loan?

It is worth bearing in mind that the likelihood of obtaining financing increases with a stable financial position of the company. Thus, by submitting financial statements showing consistent revenue growth, good liquidity ratio, and capital reserves, you will improve the company's image to the financial institution. A clean credit history and good customer reviews also play a significant role.

The possibility of getting a loan at lower interest rates also increases when the company can pledge its assets, as this reduces the lender's risk of not recovering the debt in the event of insolvency. Unfortunately, not every company can take advantage of this opportunity due to a short period of operation and insufficient accumulated real estate. However, some financial institutions offer solutions to such companies – for example, "FinoMark", unlike many other crowdfunding platforms, allows pledging not only real estate but also asset complexes – inventory, receivables, equipment, etc., which most companies can indeed provide.

E. Poškonienė adds that if the financing request was rejected at the first institution to which you submitted the application, it is important not to give up and find out the reasons so that you know where you can improve your metrics. Even if you think that the process is becoming too complicated and financing currently seems likely out of reach, it is always worth consulting with financing institution specialists who will help find solutions more easily so that the company can get financing as soon as possible.