Securing bank loans can be tough, but also, you can never grow your business if you don’g have enough money
Here are six of the most important guides to help you in securing bank loans:
1. Have a sound business plan for funds acquisition.
Having a solid business plan is your best shot at getting a loan. But it also must be a complete and well-presented plan. It is especially important to polish your executive summary. This one- to three-page summary of your business is what bankers look at first — if they like what they see, they might read on.
2. Make sure your documentations are sound for funds acquisitions.
The documents required will be determined by the type and amount of credit you need. It may be as simple as a single-page application for a business credit card, or it may require business and personal tax returns, and financial statements.
It is good to understand the legal jargon in that stack of papers you will have to sign before the small business loan is disbursed. A close look at those documents now could save you a lot of headaches later. Be mindful that your bargaining power over your small business loan vanishes completely after you’ve signed the documents.
The small business loan documents could be a bit overwhelming, but with the help of a lawyer of an independent loan specialist, you can get a full understanding of what the legalese means. In fact, many independent loan specialist encourage loan applicants to understand the loan documents before they even complete a formal application for a loan.
Generally, it’s a good idea to get the loan documents ahead of time so you have a chance to review them for a couple of days before applying for a business loan. Most lenders won’t have a problem sending advance copies of the documents, but they will generally only do so if they’re specifically asked.
3. If you intend to secure bank loans, you need to invest your own money.
Another way to improve your chances of getting a loan is to put some of your own money on the line. Lenders typically like to see that owners have at least a 25 per cent equity stake in the businesses they finance.
4. To increase your chances of securing bank loans – rent, don’t buy.
Bankers also favor businesses that plan to rent rather than purchase a building. That’s because lenders prefer that you invest in assets that generate income, like inventory and equipment. Bankers also frown on high renovation costs.
5. Check out your credit report, for it is the most important factor for funds acquisition.
Reviewing your own credit report before you start the application process can also put you ahead of the game. Lenders use your personal credit history to help them decide whether you’re a good risk for a loan, so it pays to know what they will find. If your report shows a mistake, contact the credit reporting agency and demand a correction.
If your credit report shows legitimate late payments or bankruptcies, you should include a letter with your application explaining the circumstances and how they have changed. This can soften the impact of these black marks against you. Always be honest about your credit history — covering up problems is the fastest way to get shown the door.
6. Explore smaller banks and non-traditional lenders for funds acquisition.
Don’t assume the bigger the bank, the better your chances of getting a loan. Smaller banks might be more inclined to finance start-up and entrepreneurs, and their loan officers are more likely to give you individual attention.
For securing bank loans, you should always think long term. Along with your company secretary your lender should become one of your trusted advisers. The relationship should not end once you have gotten your loan. As your business grows and your needs change, you should allow your lender to provide recommendations on other services, such as additional credit, cash management, merchant services, and retirement and succession planning.
Also, there are many loans in the market for small business owners and not all products may be the best fit for your business. What’s worse is, taking an unsuitable loan could be a huge setback to you personally, as well as to your business. So, an important factor is, work with your lender to determine the type of loan that fits your needs.
Talking to a loan specialists is perhaps the most important factor to consider to acquire funds to grow your business. Remember always that you need to borrow money when you don’t need it. If you try to borrow when you need it, chances are, you will be turned away by the lending agencies.
So, talk to a loan specialists you will be able to guide you on a step-by-step basis to help you get your hands on the much required funds to grow your business. Loan specialists have links and close working relationships with multiple lenders. They are very familiar with the loan environment. By understanding the business finance sector, they can help you understand your own unique funds needs and also who will be a good fit for your need for finances. They can help you cross your ‘t’s and dot your ‘i’s, which are crucial factors to acquire funds.
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