Starting a new business is a costly venture, especially when what you have to offer has yet to hit mass market. To keep the wheels spinning, capital is much needed. What happens when you have burn through your savings and borrowed from family and friends?
It’s time to look for professional help. We are talking about banks, of course. Loans are part and parcel of the banking industry, but like setting up your dream company, a little research is needed.
Time to Start Counting
First determine a ballpark figure that you need to borrow and how much are you able to keep up monthly repayments. iMoney has a very useful loan calculator that you can try – check it out here.
It has a list of banks and its interests to give you a general idea what are the monthly repayments like.
You can also check out websites of banks under the business loan category. Some banks have tailored solutions that cater to niche markets, for example loans for e-commerce retailer, or mobile app development.
It is also advisable to apply for a loan at a bank where you are an existing long-term client. To get a higher loan or better rates, your credit rating does come into play. Someone with bad credit rating is viewed as high risk, ruining your chances at securing a loan for your business.
Most startups face issues where banks are not keen to extend a long-term loan, simply because you haven’t had a healthy business track record.
Got Any Collateral?
Typically a startup business loan could vary between RM50,000 and RM400,000 with a five-year tenure. If you need a higher loan amount, you will need to prepare some assets for collateral. It could be any properties or investments you own or belonging to the company. This is a fairly normal procedure as most banks will want collateral as security.
Bring Important Documents
Be mindful of the documents you need to bring. Business certificate from the Companies Commission of Malaysia, company stamp bearing registration number and owner identity card are among the documents you need to bring with you. Look up at the websites of the respective banks and prepare what you have to – this will save you an immense amount of time and frustration.
Get Your Backup Ready
Most importantly, find out if the bank requires a guarantor. A suitable guarantor should be a reputable client with the bank of your choice. It is also helpful to present a sound business plan to further convince the financial institutions. Bear in mind you will be meeting financial consultants; it is a must to dress professionally. It might not seem like much, but it helps in letting the bankers see your professionalism as a business owner; therefore increasing your chances of securing a good loan.