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8 Steps to a More Successful Start-Up Loan Application

This message is brought to you by Citizen Entrepreneurial Development Agency - CEDA.

To qualify for any kind of business loan is not easy.

The vast majority of submissions that financial institutions receive simply do not make the grade, and, out of necessity, every lender has to be careful about which applications they approve.

Here are eight important steps to improve your chances of securing a positive result.

1.    Realise that money is not the most important thing

Before we move on, you must understand the first point. Having enough money to start your business today does not mean that your enterprise will be a success in the long term.

The most important piece of this puzzle is you, the entrepreneur. Your character. Your leadership. Your hunger. Your example. 

Not the loan.

Can you make these promises to yourself?

•  I promise to arrive early and leave late, every day.
• I promise to simplify my life and set aside all forms of personal excess.
• I promise to raise to the sky and maintain my standards of excellence, at all costs.
•  I promise to respond immediately when mistakes are made.
•  I promise to double my efforts to walk in the customer’s shoes.
•  I promise to try again after every setback.

This is what separates good entrepreneurs from the rest. If you’re willing to be a genuine leader and take responsibility for your own success, you are a lender’s dream come true.

2.     You must be happy to start small

Take a moment to think about some of the world’s greatest businesses and your favourite brands. The vast majority of these projects started out extremely small. ‘On the kitchen table’ is the common expression.

These founders endured massive sacrifices and stretched their financial resources as far as they possibly could.

They started smaller than you.

Our experience shows that being small is the best way to ensure that your business survives in the early days.

 Businesses which start small enjoy greater chances of success because:

• You keep your running costs as low as possible
• You learn how to solve problems without throwing money at them
• You can build closer, more personal relationships with customers
• You learn the business inside out because you’re personally involved in the daily responsibilities.

3.    Say goodbye to your day job

If it’s your intention to hold on to a safe, comfortable life as an employee and simultaneously attempt to run a business on the side ‘by remote control’ – very few lenders will be interested in you.

Providers of finance are looking for entrepreneurs who are genuinely focused on their business ideas.

Are you willing to put all your time, sweat and emotional effort into the success of your new enterprise?

If not, it’s better for you to concentrate on formal employment at this time.

4.    Risk something of your own

Collateral is a fact of life in the money-lending industry.

If someone lends you money, he needs to know that you have enough assets to pay that amount back if things go wrong. Perfectly fair and reasonable.

However, we meet too many applicants who have absolutely no desire to risk anything of their own when it comes to the success of their venture.

They make no attempt to put up any collateral at all.

Is it fair and reasonable to expect your lender to single-handedly bare the risk and financial burden if your business does not succeed?

Although collateral is something which many financial partners are willing to negotiate on, the simple fact is that candidates who do not offer any collateral to support their loan application are less likely to succeed than those who do make the effort.

Your willingness invest something of your own tells us a lot about your character – and your dedication.

5.    Take innovation seriously

At CEDA, we receive dozens of applications every single day and, unfortunately, many of them look almost the same.

We need to see more innovation from our entrepreneurs. We need to see more new ideas.

We speak about innovation all the time because we know that success in business often requires new ways of thinking.

If you want high rates of growth and high rates of profitability, you cannot do the same things that everyone else is doing.

But if you have imagination, practicality, and a first-world mentality to solve problems profitably and give your customers a superior quality of service, any lender will want to work with you.

But if you have no idea what to do and are just applying for a loan because you heard that a certain business idea was a ‘money-maker’ then your application could easily be rejected.

6.    Build up work experience in your field

No matter what kind of business you want to to start, it helps your application if you have work experience in your industry, or at least a related field.

By building up a few years of skills, you will acquire a sharp understanding of what makes that business tick.

You’ll also be able to spot weaknesses and prevent the kinds of mistakes that could easily kill a rookie.

Do not start a business as a novice. We have learnt that this can often be a recipe for disaster.

Remember that no matter how good your business plan may look on paper, very few business plans survive contact with the real world.

A business plan cannot act as a substitute for life experience. Skills in your field is a golden ticket to success.

7.    Live cheap, live smart

If you value luxury over sustainable business success, it’s best for you to finance your enterprise by yourself.

We receive requests for all kinds of frivolous, non-business related expenses. 

These are the types of submissions that get rejected almost straight away.

Smart entrepreneurs live cheap. Great investors only spend money on things that will make them money. And real business owners spend every pula as if it was their last.

If a lender detects evidence that you do not take money seriously, or that you want to impress your neighbours at any cost, or that you would have a hard time managing a large loan because of material temptations, then your application will certainly not come through.

 

8.    You misunderstand what a lender’s job really is

In CEDA’s case, the funds we use to finance entrepreneurs in Botswana are public funds.

We are accountable to every Motswana to ensure that the nation receives a positive return on these resources.

In other words: that money has to come back so that others, too, may benefit one day.

Our role is to:

• Provide support for viable business concepts
• Create sustainable employment opportunities
• Diversify the economy away from mineral dependence
• Stimulate competitiveness and innovation in Botswana, and
• Promote citizen empowerment.

Any lender has the right to be selective.

A business loan is a strictly business transaction.

It’s also a huge privilege to secure this funding.

It cannot be given. It can only be earned.

The Inner Conquest

Winning the internal battle is far more important than winning the outer one, writes our columnist LETS SITHOLE.

To make it into the history books, you have to be a man or woman of boundless ambition.

I‘m talking about ambition that knows no limits.

Today we’re going to talk about a man like that: the illustrious Greek ruler, Alexander the Great.

His father was Philip of Macedonia, also a great King who had, during his reign, brought almost all of present-day Europe under his power.

King Philip knew the strength of his armies, and he wanted more. With Europe under his belt, he started working on a battle-plan for the conquest of Asia.

Unfortunately for him, Philip did not live to see the fulfillment his of his Asian ambitions. He was assassinated by a bodyguard before the conquest began - and so the implementation of his bold plans fell onto the nineteen year-old shoulders of his son, Alexander, who immediately ascended to the throne.

Alexander shared his father’s craving for eastern territory and was eagerly to project an image of strength to his generals and advisors.

His mother, Olympia, had huge ambitions.

She encouraged him to believe it was his life’s calling to conquer the Persian Empire. Olympia’s influence instilled a sense of destiny in him, and the poet Plutarch tells us that his ambition ‘kept his spirit serious and lofty in advance of his years.’

That was Alexander. Focused. Discplined. With an unwavering belief in himself and his fortunes.

‘They say I am a boy, but I will prove that I am a man,’ vowed the adolescent as he marched ahead with his father’s bold plan.

Within three years, his Persian campaign was largely successful and Alexander dubbed himself ‘King of Asia’. The much-loved ruler had lead his people to a glorious triumph, a magnificent conquest.

And that’s when things began to spiral out of control.

Basically, at the height of his power and success, Alexander lost it. He became a raging alcoholic and a slave to his animal instincts. Records show that he rolled into the palace of a Persian nobleman, turfed out the occupants and promptly installed a party of three hundred young mistresses for company.

Alexander’s festivities did not go unnoticed.

In the ranks, generals who once followed his every command in fierce and unquestioning loyalty, began to speak in whispers about the possibility of an uprising. Exhausted after years of campaigning in foreign lands, and disillusioned by the vulgar antics of their King, the army revolted in India, on the banks of the River Ganges.

The death of Alexander the Great soon followed.

Some historians say he died on a night of binge drinking and others argue that the fatality came from poisoning from within his ‘trusted’ inner circle. Either way, it was his vices that killed Alexander.

When news reached his homeland in Macedonia, the huge empire soon disintegrated. It was all over.

The story of Alexander reminds me that the great inner conquest is more important than the outer conquest. It reminds me that my weaknesses are always stalking me, waiting for the right moment to pounce.

Newly successful people often let their guard down and become less vigilant with their finances, their attention to detail and their relationships. They forget the things which got them to the top.

This is my stern warning to you: you are most vulnerable when you’re at a peak. Be vigilant at the height of your success because that’s when you’re most likely to stop going the extra mile. For some reason, you start to think that the extra mile is for rookies.

Make sure you never get too complacent, or start celebrating mediocre successes. If you’ve had a fantastic month, that’s excellent. Take rest this weekend. But don’t turn into Alexander the Great.

Remember that with all the talk of making money and personal accomplishment, the person who conquers the market but does not conquer himself - is a loser.