Every business owner has been down this path before.
Clueless about why their bankers have rejected their loan
application. No reasons were given or they were not
specific in their explanation.
Understand the mentality of your banker
You have been with your local bank since the start of your
business and you have been happy with them until the recent
rejection of your business loan. You wonder whether they
have detected that times are less than rosy for you right
now. When you probed for answers your banker said that he
doesn't know the exact reason but it could be due to a
variety of reasons. What your banker is not telling you is
that he has all the information of your business and he has
run the ratios and looked at your credit history and finds
it lacking. But he can't tell you about it so he hems and
haws and offers you a different type of bank product. Like
a whole lot of use that would make to you right now.
Consider looking for another bank, one that does not know
that much about you as they would have lesser information
to run the ratios. That increases the probability of your
loan being approved.
Understand the risk profile of your industry
Bankers are conservative people. That's because they are
dealing with other people's money. They have to ensure that
they are not lending funds to people who are not involved
in vices like terrorism, drug trafficking, money laundering
and the list goes on. The same goes for certain high risk
countries which your company may be dealing with. These are
like red flashing lights to reject your loan without even
looking at your application.
Be honest about your business and personal liabilities
Nobody likes to be honest especially when it comes to
revealing the truth about the amount of liabilities they
have. It is an issue of ego and most people would
conveniently miss out a few details about their personal
loans or the amounts. If you would like to have your loan
approved, help yourself by helping your banker by telling
the truth. The fact is that all these missing details would
surface later on in the credit bureau report. The report
has an extensive list of details on the credit facilities
that you have with the banks in the country and some of
which could be detrimental to your loan application.
Prepare for the interviews
Whether the interview is going to take place over the phone
or in your banker's office, be prepared for it. Being
prepared means having a brief description of your company's
history, principal activities and most importantly what you
intend to use the funds for. Suit up if you are meeting the
banker as you need to portray the aura of success and
confidence. After all you could be walking away with a
large sum with no collateral save for your personal
guarantee.
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Joyce Leong is a consultant who helps companies with their
business financing needs. For Joyce's free Business Tips
newsletter, please visit http://www.businessfinancingpro.com
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