Small business owners are some of the hardest and most skilled people on this planet. They have big dreams and nothing can get in the way. A case for such a driven and motivated person is that some operating functions are often not performed properly. Because small business owners want to move quickly, some details can often be overlooked, which means that the business is not as smooth as we all want.
Applying for corporate loans is one of the operational features that small business owners can not seem to get their arms around. Here are some tips on some of the things you should not do when applying for business loans.
Banks and lending institutions have no interest in taking on any kind of risk at all. The recession has spooked lenders to not lend money to anyone, or any company that does not have exactly what they are looking for. To know this, it is important to understand what the banks' insurance policies are. Do not be intimidated by the bank or its borrowers. When you understand how their processes and guidelines work, it is easy to maintain these processes and guidelines. Ask the bank what it will take to be approved for the specific business loan you are looking for. Do they want a certain personal credit score? Do they need a good credit? Do you need you to be on business for so many years? Once you've found what these guidelines are, you can go back and work to be covered by these guidelines. Do not enter a bank and apply for a corporate loan without first knowing what their warranty guidelines are.
Your credit score is one of the biggest factors for whether you will be approved for corporate finance. Many banks will require you to have a decent personal credit score along with a good credit credit score. Yes, the two points are different. Before applying for funding, you must check both your personal credit points and your credit score to make sure they are what you think they are. Apply for a corporate loan without knowing what these points are a major risk. There is nothing worse than applying for a business loan and rejected because you thought you had a credit score of 700 points and you really had a 620. This will also affect your future chances of being approved for a corporate loan with another bank or lender. Once you have been denied by three banks, you will probably be denied by all other banks because your credit score has been checked for many times in such a short period. Do yourself and your business a favor and know your own numbers before anyone else does.
There are two facts that many small business owners fail to see in our current economy. Number one is that almost all small business owners in this country are starving for money, which means that there are thousands of small business loans in the lending office. Number two, borrowers are paid on commission, which means they are only paid when a loan has been closed. If we know that these two facts are true, it is very important to have a very well-equipped loan package. If you give an account manager an excuse to find more information about your business, your loan application will be sent directly to the trash. Loan officers want to be paid, which we only know happens when a loan is closed. In this economy, lending officers will only spend their precious time on loan applications that they know are easy to close. Your loan application must be prepared with everything that the bank wants to see when applying for a corporate loan. This includes a well-written business plan, professional financial documents, articles of association and good personal and business credit points. If you have these documents, do not put them in a shox box and enter the bank. Organize them nicely and professionally so that the banks' perception of your business is a positive one. Do not forget that you will be approved for a bank loan or credit line without being ready.
In summary, think of the banks money as your own hard earned money. Should you lend money to a business owner who does not have what it takes to own and run a low risk, positive cash flow business? No, probably not. Put yourself in the shoes of the banks and think about what you want to see. The more prepared you are when you apply for corporate finance, the better your chances of being approved for corporate finance.