Nowadays, banks doors are seem to be close for the public because of the effects of unfettered credit card debt, housing foreclosures, and price increases on everything from a gallon of gas down to a can of sardines, bank loans are fast becoming a shrinking commodity due to economic downfall. The banking world is acting in response to the economic turmoil by tightening the reigns in the lending department.
With the cards stacked up against many bank loan applicants and with the big chances of getting knocked back can seem prohibitively high, this became sour news to consumers and small businesses in need of additional funding.
It may seem impossible so forget all the doom and gloom rather present a clear, compelling case, backed up by hard facts, you stand a great chance of getting the money you want. Banks are still also a business and they want to lend money to viable businesses alone. They will definitely lend you money if you can show them that your business can produce enough profit to prosper and you are able paying them back. It will also be a plus point if you have track record to point to.
Being prepared is always the key, you will have a higher percentage of getting what you want if came prepared. You need to know exactly what you want before you start pitching for a bank loan because if you aren’t clear in your own mind what you want, tendencies are you will be turned down at once.
You’ll need to present a credible business plan and be able to speak with confidence about your business’s commercial offering. You may ask help from a business adviser towards your business plan. Plan your dialogue; know exactly how much money you need and how you will spend it. It will make you look organized and goal oriented. You must explain them clearly how the cash you are asking for will increase profit in your company or business. Be ready to present monthly cash flow projections for the next four quarters. This is necessary so will be able to demonstrate you can comfortably meet interest and loan payments or in other words you can really pay them. Expect that the higher amount you’re asking for the more details you are ask to give. It is also better to include a ‘repayments’ figure in your calculations.
You must give the impression to the bank that you are the real deal. Be ready to detail any market research you have carried out. The people in your team is also a plus, make them realize that you have the best team and your business is a sure hit.
Nothing beats being honest but also remember to be energetic and enthusiastic to build rapport to the one your dealing with. The bank will need a true picture of your business so it will also be a good idea if you mention weakness in the business but not too much or else you will fail.
After making sure about those details, also it is better to have all documents to hand so that you are able to furnish the bank with up-to-date personal and business financial histories. Bring with you acceptable credit score or personal reference, and to go through your latest accounts, tax returns, assets and liability statements.
Lastly, you need to think about terms. This is very important. How many years will you need to repay the loan? Make sure you have fixed rate of interest, or a variable rate which moves up and down with the Bank base rate. The terms should fit your business strategy, and ensure you can continue to meet your repayments even if the company hits turbulence.