There is so much information out there telling you on how to get a business loan successfully. And while some hold a degree of truth and possibility, not all of them are quite helpful. But perhaps the most common trait shared by these information articles is that most of them are written with a borrower’s perspective. If you really want to get a business loan, then here is the ultimate advice – look at it from the banker’s eyes.
Understanding the mechanics of a business loan from the lender’s point of view will give you a wider look on how things work. While it is true that some banks and lending firms have recently increased their loan approval rates, mainly because of the stimulation brought by the lending programs of the Small Business Administration (SBA), these financing establishments are still wary as to who to finance and what business endeavors are worth investing in. So how do you know what’s in the mind of a banker when you apply for a loan?
Basic Principles Of Writing A Business Plan For The Bank
If you need to get a loan from a bank to finance your business operations, you will need to come up with a good business plan to convince the bank that your business will succeed. Since banks are very much concerned about the effects of business risk on your ability to pay for your loans, your business plan should deal with the risk involved in the business and present feasible solutions to these risks. By reducing the amount of risk, you will be able to bring your business closer to its goal.
Credit rating is one of the most staple components in any loan request and understandably so. If someone approaches you for a loan and the borrower has a history of missed and delayed payments, would you immediately shell out the money? Of course not. That is the same mindset bankers have when they deal with people with loan applications. Bankers look at their credit history and see whether they have some episodes of difficulties of keeping up with the payments.
Looking at the whole scenario from a banker’s point of view, it is also important that you dress up for the occasion when you are given the opportunity to present your business plan. This phase is known as the loan interview. Bankers treat loan interviews as business engagements and as such, you should suit up like you mean business. Showing up dressed in anything that does not resemble a business suit will have a huge and adverse effects on your chances to secure a loan.
To sum it all up, if you know how to get a business loan, see it from where the banker stands. And you just might get your loan.