It’s never easy to find money to start a brand new business. In fact, this is one of the most difficult problems to solve for the new businessmen. One of the most reliable and likely source of generating capital for starting your own business is of course your family, friends who can lend you some money and also your own savings. However, in some cases, capital raised by these resources is too low and for some people, they don’t have such friends and family who can afford to give money. Therefore, you should not overlook the possibility of acquiring a loan from financial institutes.
With a good track record of borrowing money for business purpose, it’s very easy to get new loans but with no record, securing business loans from banks can be difficult. Banks usually see risk factors before giving away loans. If you haven’t ever secured a business loan in the past, your case becomes a bit risky for the banks to grant you a loan. This of course does not mean that you can’t do that. If you follow a carefully designed plan and know your work around banks then you’ll be able to get a loan. We hope that after reading this article, you will be able to learn more about bank loans and how to get approved for one especially if you have no previous record!
Banks need to give loans to earn money and stay in business
Banks need to give loans, they need to stay in businesses and survive in the competition. Never be shy or afraid to ask for a loan. To improve your chances of getting your business loan approved, try to find a bank that has done business with a company or an individual who works in a similar or same industry as yours. Some of the banks can lend money using conventional methods which means lending money to borrowers without the support from the government and some banks don’t. They lend money with government’s participation. Always remember that banks often require rigid collateral requirements for people who want start up business loans.
Be completely prepared when you go to the bank to request a loan
Since you don’t have a previous record of a business loan, you need to show the bank that giving you loan has low risk involved. Always have a completed and a professional loan application ready. Also keep copies of cash flow and financial statement projections that cover at least 3 years and also have your cover letter with you.
Anticipate difficult questions and impress your loan officer with your answers
One of the most important and powerful way of negotiating with someone is the combination of information about your preparation. If you are prepared to go in as a confident person, one who is able to answer difficult questions and one who has knows what he wants to do and how to do it, you’ll be able to seal the deal. Make no mistake that a borrower who is well prepared is far more likely to get approved than a borrower who can’t answer even the basic questions. Making your bank realize that you know what you are talking about and how you are planning to do it is the key. Show them that you have done all the research at your end, that you have figured most of the pros and cons of your business and you have a plan of dealing with different issues.
Always keep a positive attitude
Leave your negativity (if any) outside bank’s entrance door. Forget about it, have no fear. Remember that they want to give you the loan and remember that this is how they make their money so when you walk in your bank, think of yourself as a client that will actually pay the bank and not only the other way around. This does not mean that you talk in a rude manner. Stay polite, very pleasing yet energetic and confident. If you have any promotional material with you, show it to your loan officer. Promotional material can be anything like your brochure, print ads, online or printed articles, press releases, news items, a print out of your website etc.
Dressing plays an important role
Besides promoting your own business, promote your personality. Market yourself too. Make sure that the loan officers make a positive mental note about you when you meet him and when you walk out of his office. You are there to do business -- treat it like one!
Don’t push it
Be positive but don’t be over-positive or over-confident. There is no business without a risk. You know, we know it and your bank officer knows it very well too. Before you apply for a loan, do a little research and see the weak areas in your business. If you don’t mention risks involved in your business then it will make your banker think that you have not thought about it. This insures the bank that you know about the risks and are not trying to fool them. They always have many ways to check the facts written in your application. Do a little research and try to support everything you say with facts not assumptions.
Typing and organizing your documents
Handwritten documents do not look professional. So type and print them. Always remember to include the covering letter with your application. Organize your documents; show them that you are a consummate professional and not a naïve guy with big dreams alone.
Don’t force your loan officer
If you want your application to be approved, never force your loan officer to make a quick decision. Don’t force him or persuade him to make a decision in your favor in an unprofessional way. Some people get desperate and frustrated and try to force their loan officer to make a quick decision and we can safely tell you that this never worked and never will.
A reference can go a long way
You can improve your chances by asking for a referral from a person who is a successful entrepreneur and who has gone through this procedure. Referrals makes your case a bit less risky but remember this won’t save you from going through all the steps needed to get your loan approved. Still, bankers tend to go easy with the people who are referred to them by their existing; mind you -- successful clients. If you can not find a friend or an associate who can refer you to the bank then don’t worry, everybody starts from somewhere. Perhaps, in the future, you could be the one other people would approach for a referral.
First step is always the hardest one
In this case, the first loan is the hardest loan to get. Business loans can help you go a long way but what comes even more handy is your devotion. Don’t get frustrated if one bank decline your application. There are hundreds of them out there. Learn from every mistake that you make and don’t repeat it. Approach another bank with the same level of confidence and even more experience of dealing with bankers. Eventually, you’ll make it. Good luck!