Business Loans Advice
Apply for business loans isn't easy as home loan, entrepreneur has to do a lot of exercises to proof that he is committed to the business and capable to repay the loan. Fulfill all the requirements will only gain the chance of getting the loan. Because the lending amount in this loan is greater than any loans, thus bankers / lenders are very particular on borrower's (corporate / entrepreneur) reputation.
2 Main Things Lenders Will Look For Borrower
1) Credit score of business owner shall be 675 upward.
2) No bankruptcy and foreclosure will disqualify borrower too.
"In order to make your application successful, you must think as a banker. The information provided must be logical manner. There are 4 distinct phases of analysis in the Loan Request process:-"
1) Loan purpose analysis - the common questions by lenders is what is the specific request? Does the purpose reasonable, consistent to the bank policies & guideline? Is it legal? Borrower must has ability on cash management, need to meet payroll or to pay accounts payable, are not underlying problems. Borrower should clearly define the purpose of getting the loan, lenders will analyze the situation whether the loan is necessary for the scenario.
2) Repayment source analysis - In this stage, many documents will be taken as consideration as the repayment sources available. The documents such Business Review, Cash Flow Analysis, Financial Statement, Management Review and Summary of the strength and weakness of the request.
3) The structure of the loan - This is an important step entrepreneur need to understand. How long the fund can be approve and ready, the interest rate, term of payment. Do not just focus on the interest rate, banker can increase the cost in fee, deposit and other elements in the pricing scenario.
4) Management of the loan - After the loan been approve, bankers will relies on 3 sources to track the loan performance of borrower. 1st, internal bank system such company account with the bank, deposit relation and so on. 2nd, data requires from the small business, such as the quarterly financial statements and any other insight provided to the banker during visits. Lastly the external information from vendors, suppliers or customers. A wise entrepreneur will manage these 3 sources to initiate communication with the banker to creating a good relation with bank.
For more loan information for business, please check out Business Loan Guide instead of Business Loans
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