At some point in the course of your business, you will need additional assistance to further grow your business. Be it in terms of additional working capital to support expansion or additional funds to improve your production.

Getting a business loan – if manage wisely – can help in fuelling your working capital for business growth. But the question is: How can you convince lenders to give you the business loan that you need?

In the recent series of Practical Practices webinar, Mike San Diego, CFO of JK Capital, shared some best practices and practical pieces of advice to give you the confidence the next time you knock on the doors of lenders.

Be knowledgeable

First of all, you have to be knowledgeable. Without the right knowledge – and your fear of rejection, you can end up missing your golden chance to get a business loan.  You might feel like that there are a lot of requirements needed to get a business loan and it might work against you. Instead of this kind of mindset, San Diego advised business owners to “understand first why lenders need these requirements.”

“You need to remove the idea that getting a loan from the bank is difficult,” he added.

For example, lenders require you to show your financial statement to see how you are managing your business in terms of liquidity. For the income statement, it helps them to assess your income potential.

Be disciplined

While equipping yourself with the right knowledge, you also need to be disciplined.

San Diego emphasized the importance of separating your business and personal account. “You cannot use your business bank account as your personal savings account. Otherwise, you’re doom to fail.”

If you don’t have any business bank account yet, UnionBank is offering Biz Starter, a business checking account for business owners with only P5,000 as opening and maintaining balance. For more details, click here.

Also read: Introducing Biz Starter: Checking account for MSMEs, exclusively for UnionBank GlobalLinker members

The best practice in managing your business funds is to separate your personal and business activities. Remember, being disciplined financially will prepare you in handling your business growth and expansion.

Do I need to avail of a business loan to grow my business?

Whether you have enough cash flow or not, San Diego still recommended to get a loan – the small business loan will count - for you to build your credit history. “You need to establish your character. Even if you have a good performance for the past 10 years, but you don’t have a credit character, it will be difficult for lenders to trace and find out if you’re a good payer or not,” he explained.

Credit character simply refers to how you handled your past debt obligations. This will allow lenders to see if you are responsible enough to pay your debts.

Also read: 6 financing options to help your business stay afloat during and after crisis

What if I have a bad credit history?

Don’t fret. There are ways to fix your bad credit history. It starts by paying your outstanding debts. You cannot run from your obligations.  You can go to the lending company and assure them that you will pay your debts. Negotiate and ask them to lower the interest. Once you are able to pay your debts, ask for a certificate or clearance as proof that you are able to pay all your debts.

Given that you are able to get a loan, what’s next? To find out the smart and sustainable ways to use your borrowed funds, UnionBank GlobalLinker will be organizing another webinar in partnership with Small Business Corporation and Bounceback PH.

Learn from business and financial experts on how you can make smart use of borrowed money. Join us tomorrow at 5:00 pm! Register here

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