As a travel business agency, you probably need additional money for several reasons. Whether you are looking to expand your portfolio, hire extra staff, bridge the cash flow gaps in your operation expenses, looking to move to a new office or for any other reason — a small business loan is an excellent way to grow and expand your travel business.
Here, in today’s guide, you can find a list of tips from business experts that will help you secure your travel business loan with ease.
1. Determine The Amount You Need & Why You Need It
Before you start looking for a lender, you should first determine the amount you are seeking as a loan and why you need that amount. When lenders see that you have a clearly defined need, and you are clear on how you are going to spend that amount, they see that you are committed to the loan. This improves your chances of securing the loan.
Having a detailed financial plan on how you intend to spend the loan amount and how you plan to repay it, goes a long way in getting your loan sanctioned.
2. Be Aware Of Your Credit Score & Work On Ways To Improve It
Though different lenders have varying credit score requirements, boosting your credit score will work in your favour while submitting the loan application. If you have any outstanding credit card bills and other dues, make sure to settle these, before applying for a loan.
3. Know The Different Types Of Business Loans
Before you approach a lender, finding out the right type of business loan that works for you is imperative. Understanding the different types of loans available helps you choose the right one that suits your specific needs.
Here’s a quick highlighter on the different types of business loans:
- Term Loans — If you require one-time capital needs for various needs like — expanding your office, hiring new team members, marketing and more — term loans are the best solution for you. These are short-term unsecured loans with tenure of up to 36 months, and interest rates starting from as low as 1.5%.
- Line of Credit — Also known as overdraft facility, this works well for businesses that require frequent cash inflow. When you choose a line of credit from digital lenders like Indifi, you enjoy minimal interest rates, amount flexibility, low processing fees and quick approval.
- Invoice Discounting — Do you find it difficult to manage late payments from clients? Then, the invoice discounting is an excellent option for you. Here, the lender pays you up to 90% of the invoices you raise to clients, and you can repay the amount when the client pays you.
- Merchant Cash Advance — As a travel agency, most of your transactions probably happen through credit or debit card swipes. The merchant cash advance lets you borrow money for various business needs and you can repay your lender directly, through daily deductions from your swipe machine transactions.
Check out the features and terms and conditions of these different business loans, and choose the right one that meets your specific requirements.
4. Prove Your Ability To Repay The Loan
If you are a small business, who is just getting started, then your lender will evaluate your ability to repay the loan before sanctioning it. If you have any property registered in the name of your business, then you can use this collateral to secure your loan.
Don’t own any assets? Worry not, several digital lenders now offer business loans without the need for any collateral or guarantor.
5. Demonstrate Cash Flow
Your lender will ask you to submit your business cash flow statements before they approve your loan. Make sure that you have the required document at hand like — your bank statements, tax returns, invoice details and more.
Finally, Choose The Right Lender
Traditional lenders like banks usually don’t offer loans to small businesses and startups that are finding their feet. And, even if they do, they may charge higher interest rates, require you to submit collateral, and come with prepayment penalties and other processing charges.
On the other hand, several digital lending platforms like Indifi, provide an array of simple and tailored business loans, customized to your industry requirements. Make sure to spend some time researching on the different types of lenders available and the various loan products, before you choose the right lender who offers you the ideal business loan at the best terms.