How to Increase your Qualifications for a Business Loan
By: Ryan Attelle
So you didn't get a business loan from the bank. It's not the end of the world. In fact there my be a few details you missed, that when properly addressed can greatly increase your approval rating for a business loan.
The thing to remember is that banks wants to lend money, that's really why the exist. Similar to the way customers sell things, bank in a scene, rent money. But ultimately they want to get there money back. The first step in gauging whether or not there going to get that money back is to find out if a business has the ability to repay. And here in lays the reason why many loans are rejected, because as far as they see it, if the business can't show they are bringing in sufficient funds to repay the debt to the bank they are not going to issue the loan This decision is the right thing for the customer and the bank. But often times this decision is reached because sufficient proof of an ability to repay was not properly presented.
There is also the instances where loan rejections occur due to insufficient security. A bank is always looking for two exit strategies, the first of which is that the business asking for the loan can generate enough cash to repay it, the second is to present enough security to show they can back up the deal.
Some things that you can do to make your business more approval ready is to make sure you have a well thought out possessive cash flow for cast and a solid business plan, one that you your self fully understand and one that the bank will easily understand as well. This would include a full understanding of your own business and why exactly you and your business need the money and how that money will be utilized to generate more income and foster growth.
Another tip that can help you on your way to a bank loan is to talk to the bank as soon as you consider borrowing money. This gives you the right information directly from those you want to borrow from and also provides you with sufficient time to get all your ducks in a row.
There is also a misconception that banks will only lend money to those who have a prior history of repayment. It is important to note that there is no prerequisite to have borrowed money before. In fact at some point almost every business is in a place where they have never borrowed money.
Remember that banks are in the business of lending the money you seek, so the real goal here is to present to the bank evidence that gives them the confidence that you and your business will be able to pay back the money you have borrowed.
Connect with Ryan on Google+ or Go Back to Article Index