There would be no argument when it comes to the importance
of a business owner being prepared and organized when
applying for loans or an unsecured business credit line.
However, most forget the tedious and necessary process in
choosing a lender.
The obvious first choice would be to approach the bank or
credit union you currently do business with due to the fact
that you already have a relationship with that financial
entity. When a lender considers loaning you money, the
risk involved is the repayment of said obligation. If on
the other hand the bank knows you and your payment history
is adequate, this could definitely play in your favor.
Start the process by inquiring with your bank or credit
union about the type of loans they offer and the options
and restrictions that exist. If you decide not to use this
lender, then perhaps consider one that wants your business.
This would be the proper time to check the newspapers,
yellow pages and research the internet extensively for
special or creative financing.
Take the time to understand the different types of funding
available to you. Most offer both secured business loans
and unsecured business loans or credit lines. One
obviously requires you to pledge some type of collateral.
This in turns allows you to borrow larger amounts of money
at lower interest rates.
An unsecured line of credit is one where no collateral is
attached to the loan. But make no mistake. You are still
under obligation to make timely payments regardless of
whether your loans are collateralized or not. The
advantage with the latter is that there are no risks on the
assets since they were not pledged as collateral. This is
in your favor. Some banks will do this; most will not
consider this at all.
It's good to note that lenders who regularly offer small
business loans many times make the easier and quicker
process. I would suggest that you seriously consider
credit unions when selecting a possible banking
relationship.
Credit unions are in most cases smaller which in turn may
allow you to discuss your lending needs with upper
executives that you normally would not have access to in
larger banking institutions. But also realize that even if
this should be the case and the person you meet with
believes in your idea, your job in securing these funds is
not yet finished.
Always make sure that you have a backup lender even though
you may feel absolutely sure that this lender will give you
the credit lines you are seeking. Keep in mind that there
are scores of financial alternatives that are available to
you if you do the necessary preparation at the very
beginning.
A very strong advantage for you and your business would be
if this bank or credit union has experience with lending to
businesses that are similar or are in the same industry as
yours. This lender should be one that you would feel
comfortable enough in developing a strong business
relationship with and at the same time fostering a mutual
appropriate for you and the lender.
Ask good questions when sitting down and discussing your
goals and needed funding. How long has this bank been in
business? Do they appreciate small businesses and their
contribution to the community and how both of you will
benefit monetarily. Is the lender more of a commercial
lender or a consumer lender. These answers will be
pertinent when it comes to making that final banking
decision.
Ultimately your decisions will also mirror what aspects of
growth you expect in the future. A larger institution may
offer numerous banking resources and locations even to the
point of national banking. Yet a smaller bank would offer
easier communication with various key personnel that may
eventually have insurmountable influence in your day-to-day
operations.
Now is the time to fill out a formal application for the
amount of funds you are requesting. And if for some reason
you are declined for your banking request, don't give up.
Go and use your backup lender. Above all else, be patient
and take the needed time to follow through with your
arduous task of locating additional funds for your business.
Whatever amount you receive, by making timely payments,
this will undoubtedly make it much easier down the road in
securing additional unsecured financing thus making your
job in this area more enjoyable and profitable.
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If you are a new business, established entity or perhaps a
real estate investor that is looking for easier access to
unsecured business credit lines, then you must visit Floyd
Tapia's blog that is mandatory reading in the banking
industry. Starting here will educate you and make your
credit line requests much easier to locate with assured
accessibility.
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