We all know how tight money is at the moment. Banks’ reluctance to lend to small businesses is a real issue for entrepreneurs looking to start or expand their businesses right now.
There’s nothing more frustrating than having your big idea stymied because you can’t get enough backing. Some have chosen to go ahead anyway, either by using their life savings or turning to family or friends for loans. But be careful: not securing enough financing was one of the four biggest mistakes according to small business leaders in a recent Hiscox survey.
Trying to get into the lender’s mindset could help improve your chances of getting a loan. What are banks most worried about? That your business will go belly up, leaving them with bad debt on their books. What you need to do is reassure them that you’ve done everything you prudently can to protect your business – and their investment. A great way of doing that is to buy small business insurance to protect your enterprise, which should and also make yourself look like a better credit risk in their eyes by protecting yourself from potential legal threats.
Properly insuring your small business shows the money men that you’re serious about managing your risks. Purchasing business owner insurance, professional liability insurance, general liability insurance and workers’ compensation insurance demonstrates to lenders that you’re prepared for potential setbacks, such as a fire on your premises, a lawsuit from an unhappy client or costs associated with an injured employee.
With economic confidence still so fragile those small businesses that are able to set lenders’ minds at rest about their financial strength will be those that are likely to seize new opportunities and thrive, not simply survive, in today’s business environment.
Written by Hiscox Small Business
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