Finding it difficult to raise the sum you need to invest in your business, to start the new business you’ve always dreamt of, to buy the equipment you need for your business or the merchandise you wish to sell, as well as to expand your business activities (such as open additional branches or engage in R&D)? You are not alone. Quite a few small and medium-sized business owners in Israel find themselves in a hopeless situation when applying for a bank loan. Despite these businesses being the main growth engine of the economy, business owners are confronted with the banks’ rigid and harsh credit policy. The Fund for Small and Medium Business, which was founded with the goal of assisting this major sector of the Israeli economy, also set criteria that make it difficult for small and medium-sized businesses to obtain a loan, and in any case can only offer relatively small sums because their budget is far from sufficient to meet its objectives. The inherent discrimination in the banking system, in which wealthy individuals and powerfully businesspeople can easily obtain ample credit, while more modest business owners often suffer from cash flow difficulties and obstacles in developing their businesses because the bank does not provide them with credit beyond the capital they have worked to accumulate – have made off-bank loans an attractive option for growing their businesses. In order to take out a loan that will leverage your investment and allow your business to grow, there are a number of factors to consider. This article will briefly outline three of the main factors:

Choose the type of loan that is right for you

A bank loan is not the only option open to you. In order to leverage the success of your business, you can also opt for an off-bank loan that will not affect your debt to the bank. You can take out a loan from one of the private financing companies operating with the approval of the Treasury, from one of the credit card companies or from an investment house. Another option is a peer-to-peer social loan, which enables you to obtain the amount needed to grow your business quickly and circumvent the tedious bureaucratic maze.

Consider your financial situation

Do you manage your business accounts in an orderly manner and without exceeding your credit line? What is your business’ monthly turnover? And can you meet the deadline for repayment of the loan without suffering credit problems and overdrafts? The answers to all these questions are relevant to your ability to obtain a loan with attractive, preferential conditions without paying a heavy price in the future. You must address each one of these questions in order to make the right decision.

Set the targets for your loan in advance

Before choosing the most suitable loan for you, you must define its purpose in advance (for example, financing business expansion or ongoing operation) in order to determine the amount you need and to apply it so as best to realize your targets. In addition, never postpone taking a loan until you need it in order to survive, and therefore may choose the first option available. Instead, you need to consider all the available alternatives in advance and the lengthy bureaucratic procedures that are sometimes required to attain the type of loan you prefer. It is better to take a loan with favorable conditions when your situation is good, than much less favorable conditions when your business is in bad shape.

Don't be afraid to take a decisive step

At the end of the day, all of these choices lead to a decision that will determine the future of your business. Don’t be afraid to take a calculated risk and take well-considered steps that will take you to the next level of business growth. Taking a loan with the right condition, time, amount and platform may be the step that will change everything. Make this decision soberly, based on informed consideration of the alternatives, yet decisively. At the crossroads you’ve reached, the ball is in your court.