R2 FINANCE

It is a well known fact that to sustain a business or to make it grow, sooner or later you will have to turn to external sources for finances. Now financing from external sources can be a tricky proposition especially due to the fact that external financing is quite costly and the only way to ensure your profitability is by keeping the cost of financing to a minimum. So here we present to your three methods or ways that can ensure cheap financing for all your developmental, growth or sustenance needs.

No 1: Planning For the Future

The first and the most important thing to do is plan for the future in advance. This means that you should plan out when you would need external finance almost a year before you actually avail the finance. The advantage of this is you would get ample time to prepare a robust application, negotiate with providers and get the best deal for yourself. If you leave out the planning part to the last minute then you may not be able to get the best deal and may even have to go in for something that is more expensive. Also waiting till the last minute would also give the impression that you have not completely planned out what you are going to do with the money that is being loaned out to you.

No 2: Work the lender

After you have prepared your financial plan, the next step is to present the plan to a number of lenders and ask each lender to submit a proposal. Apart from focusing on the cost, try to focus on factors such as quality of service, work relationship, industry experience, etc. Also use your track record to reduce any costs or charges that you think are not justified. You can very easily negotiate a good rate for yourself if you are having a good credit record.

No 3: Ask For More

Most of the business owners think that if they ask for too much from the bank, they are going to be refused. This is not at all true. While taking money from a bank, modesty is a virtue that is best kept aside. This is due to the fact that if you ask for less return to the bank after a few months to ask for more, then it is going to have a bad effect on your reputation and also some amount of money would have to be spent on processing the loan application. Thus it is always advised that you ask for more rather than less.