05 Dec 2022 | Edukatips

5 Steps to Apply Loan for Business Expansion

All businesses would not want their business to stagnate. The solution is to get a business loan that can be optimized for business expansion, from refreshing cash flow, adding branches, intensifying promotions, and innovating products. How do you get a business expansion loan? Find the steps here.

Many businesses are still reluctant to apply for a business loans as additional capital. Complicated applications, high interest rates, and concerns that it will increase operating expenses are some of the factors that are most likely behind it.

In fact, if examined more deeply, business loans are considered productive debt. This means when it’s used optimally, these loans will be able to support business continuity and expansion.

Most importantly, applying for a loan isn’t as difficult as you might think. This mindset needs to change because these tips for applying for a business loan can help.

Have a Well-Conceived Business Expansion Plan

Business expansion is broad in scope, ranging from increasing inventory, adding production capacity, opening new branches, to entering new markets and business fields. Therefore, before applying for a business loans to a financial institution such as banks, first finalize your business expansion plan, complete with future business prospects and which side of the expansion will be prioritized.

Thus, the direction of business development can become clearer and you as a business owner can convince lenders because you already have a clear and measurable business development plan.

Keep Cashflow Smooth and Create Financial Reports

A business will not grow without a smooth cash flow within a certain period of time. Maintaining a smooth cash flow is not difficult. First, separate between business accounts and personal accounts. 

Next, record every business expense and income in detail and then make regular financial reports. This is important to help you manage your business cash flow well and maintain profitability.  

In addition, a healthy cash flow accompanied by an organized financial report can also increase the chances of getting a business loan. The company’s financial report is one of the documents generally requested by lenders in applying for a business loan.

Apply for Business Loans as Needed

Do you want to expand your business on a small, medium, or large scale? This question needs to be answered so that the business loan is effective and can be used optimally.

If the expansion is small-scale and involves only one aspect, for example increasing the stock of goods, you can apply for a short-term loan with a nominal loan tailored to the needs of the expansion. So that when the target has been achieved and the loan is paid off, you can apply for another loan for the next business expansion.

However, if the expansion is medium and large scale, you should consider applying for a larger business loan with a longer term option according to business capacity (cashflow & profitability). This is important to ensure that the loan and instalment amounts do not burden the company’s operational costs so that it can continue run smoothly.

Don’t Buy a “Pig in a Poke”

Avoid buying a pig in a poke by fully understanding the information about the business loan product you want to apply for. You can do this by diligently searching for information and learning the terms and conditions of the application, then the interest rate, types of the rates, loan term options, and fees that will be charged.

In the digital era, taking this step is fairly easy. Every credible bank or financial institution must provide detailed information, loan calculation simulations, interest rates, administration fees, as well as promotions and credit programs in detail on its official website. Another option, you can directly ask and consult with the branch office that offers the loan product.

Complete the Required Documents

Now that the expansion has been well-thought-out and you have a healthy cash flow and financial reports. You also knew how much loan you need and all the information about the business loan product.

It’s time to prepare the required documents. This last step cannot be underestimated considering that the bank or financial institution will definitely examine the customer’s documents carefully.

And, if these requirements are found to be insufficient or inappropriate, it is likely that the loan application will be rejected. Therefore, it is mandatory to complete the requirements in the form of documents, including:

  • A copy of identification such as KTP, NPWP, Family Card
  • A copy of licensing documents such as Business Certificate or Business Identification Number
  • Financial reports and or monthly purchase sales recap
  • A copy of bank statements of the last 3 months

For business loans with collateral, it is usually necessary to have collateral ownership documents, such as house/shop/warehouse certificates along with IMB, vehicle BPKB, securities, other assets.

After understanding the 5 right steps to apply for a business loan above, what else are you waiting for? Grow your business with financial support from a trusted financial institution such as BCA that offers business loan solutions namely Multipurpose Business Loan (KMU).

With low interest rates, fixed rates for up to 5 years, and instalment periods of up to 20 years, Multipurpose Business Loan (KMU) is the right choice to meet all working capital and business expansion needs. Find out more about BCA Multipurpose Business Loan here

Read Also: How to Get a Business Loan from a Bank and Tips to Maximize It