Understanding Industry-Specific Loans

What are Industry-Specific Loans?

Industry-specific loans can provide you with working capital when you need it. Because these loans are specially designed for the unique needs of your industry, they often involve a more streamlined application process, better rates of approval and a product that is simply more effective for your needs. However, even when applying for an industry-specific loan, there is always a chance of being turned down. We’ve compiled a list of tips and guidelines that will help set you up for success.

5 Tips on Getting an Industry-Specific Loan

  1. Write an industry-oriented business plan.

When you write a business plan for a general banker, they often only understand the overarching themes and may not have a distinct understanding of industry jargon. However, that is different when you are applying for an industry-specific loan. The loan officers looking at your documents likely understand your industry inside and out, and as a result, a business plan that truly explains your goals and how they fit into your industry can boost your chances of approval.


  1. Share industry-specific data.

Some industry-specific lenders don’t even require a business plan. This is often true of fintech companies who use different criteria to evaluate the creditworthiness of lenders. For example, instead of providing a business plan, a three-month cash flow estimate and a number of other forecasts, you may simply share a lot of data about your company or your personal finances. This data can vary from lender to lender, but it can also be affected by your personal preferences as well as the apps or programs you use.

When deciding which information to share, consider sharing data that is unique to your industry. For example, if you run an ecommerce shop and you’re applying for a loan for retailers, you may want to share your data from your payment processor, ordering software or inventory records. Alternatively, if you are building up a service-oriented company, you may want to share data about consumer reviews — as those reviews can be an important indicator of your future success.


  1. Figure out how much you need.

Even if your lender doesn’t require a business plan, you should write a business plan for yourself. It should detail what you want to buy and how you expect those investments to affect your long-term sales and revenue. Try to be as exhaustive and detailed as possible when outlining your financial needs. If you forget necessary expenses, you may not borrow enough money. That can prevent you from having the working capital you need.


  1. Offer to put up collateral.

Whether you are applying for an industry-specific loan or another type of business loan, you may be able to improve your chances of success by putting up collateral. The collateral you select can vary from buildings to equipment to inventory, and it may even include personal assets.

In particular, with industry-specific loans, you may want to put up collateral that is relevant to your industry. For example, if you own a restaurant with an expansive wine cellar, you may offer to use that as collateral, or if you own a software company, you might use a trademark or a piece of intellectual property as collateral. In many cases, a general lender may not understand the value of these types of assets, but an industry specialist may be willing to jump on the opportunity to use those types of niche items as collateral.


  1. Do some comparison shopping.

If possible, don’t just apply for the first loan you find. Even in the world of industry-specific loans, there can be a lot of competition, and if you want to find the best product for your needs, you should do some comparison shopping. Look at the cost of the loan in terms of interest and fees, but also look at the application process. Consider how time-consuming it is, what information you need to provide and how easy the application is to navigate. You can even apply for more than one loan and then choose the winner based on which option has the best terms.


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