10 Pieces Of Advice - Getting A LOAN
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10 Pieces of advice - Getting a LOAN

Technical Architect
In life, our society follows certain cultural norms, rules that guide our everyday living. We don’t cross the street when the light is red, there is a specific side of the road to drive on, and we all generally follow these rules in order to keep life relatively orderly. Those rules are fairly well known, but are you aware of the rules involved when seeking a loan? There are a number of simple rules to remember in the loan game that will improve your chances of coming out the victor in this game.

Let’s start on a positive note and go over the “Do’s” of the loan game.

1. Do you have a Business Plan?

Your business plan is going to be your map to success and therefore you must take time to carefully develop it. Make sure it is thorough and without gaps that will leave the lender scratching their head and ultimately having more questions than answers. Those questions will only end up back on your desk, in writing, and your loan will be sidelined for a longer and unnecessary amount of time.

2. Put your money where your mouth is.

You can spout rhetoric that would leave Aristotle breathless at such eloquence, but following the words with action will incite more confidence from the lender. Lenders like to see that someone has a personal stake in their venture. It leads to the thought process that the business owner will really hustle to make the investment a success. Ideally, a 15-25 percent equity stake in the business, or more, is what a lender will look for.

3. Renting is “all the rage”.

Lenders would rather see a business plan that involves renting rather than purchasing a building. This is due to the fact that the lender would prefer you to invest in assets that will generate additional income such as inventory or equipment. The odds that renovation costs might come into play add risk if the building is owned.

4. Check that score!

Before you go blindly into the loan application process, check your credit score. It’s simple, fast, and likely to save you future headaches. You need to know what the lender will find when they look at your credit report. If there is anything to be cleared up, be proactive and take care of it. If something needs to be explained, you’ll go into the meeting well prepared.

5. Updated Financials

Whether you are seeking a personal or business loan, you shouldn’t apply without having the proper financial documentation. This is an area where many people put the cart before the horse, and try to get a loan without making sure their financials are up-to-date.

Now that you’re feeling positive about your prospects of getting a loan due to the helpful hints above, it is time to discuss the pitfalls associated with the loan application process.

The following are the “Top 5 Don’ts” of the loan application game:

1. You Don’t know your credit rating.

Hopefully you have realized the importance of this often overlooked piece of information. If you haven’t, possibly you are in the wrong business and should gracefully bow out now.

2. You Don’t read the terms carefully before signing.

You may be in a hurry to get your dream business off the ground, but there is no excuse for not reading the fine print. The lender feels no qualms about asking you questions and at this juncture you too, must ask questions. Seek clarification on anything you don’t understand.

3. Don’t forget the little guys.

Too often people get caught in the “bigger is better” frame of mind, but in terms of getting a loan from a larger bank, that isn’t always the case. Explore your options with smaller community banks. Those banks might be more willing to fund local businesses such as yours. In addition, you will enjoy more personalized attention from a smaller establishment. You should also consider what the Small Business Administration can do through one of their loan programs.

4. Don’t make major changes.

When applying for a loan it is important to not make significant changes in personnel or the business. This undermines the stability of the business, something the lenders will be looking for.

5. You Don’t have any collateral to offer.

Having collateral to offer the lender is integral to you attaining your loan and almost certainly will be needed.

Ultimately you can have a great deal of control over your final outcome in the loan application process. You can create your own success through hard work, research, and preparation. Don’t be your own worst enemy by not attempting to constantly improve you and your company’s financial resume. Once you are on the right path it will be easy to keep a steady course towards your entrepreneurial destination.

For more on these topics visit Dyer Consulting Group.

Aaron Dyer is President of Dyer Consulting Group, a firm that works with start-ups and small businesses who want to increase the value of their company. He helps them focus on ways to grow their business through better strategic planning and financial management, which have led to higher revenues and greater profitability for his clients. Aaron brings over 12 years of proven financial, business development, strategic planning, sales and marketing, and management expertise to his clients. His passion for helping companies improve their operations and create value compelled him to found Dyer Consulting Group.

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