We all know the importance that business or commerce loans have in a start up or continuing a business. A strategic business person needs an approach that will give him an edge in acquiring loans from any financial institution. For one to be able to convince banks to give loans, if need be, the first most important point is to put themselves in the lender’s shoes. Questions like ‘is my business able to pay up the loan promptly?’ and ‘will I be in a good position to get a second loan from the bank next time?’ All these questions are of great importance in analyzing one’s ability to get loan. This helps a great deal in coming up with a proposal that responds to the needs of the banks.
Why Many Businessmen Find It Impossible To Get A Loan?
Have you ever wondered why many find it impossible to acquire business or commercial loans? There is a lot of talk among the growing business people about being unable to get loans to sustain their businesses. Financial institutions have quite a large volume of requests for loans that they either approve or decline each day. The requirements for loans for business are becoming even stricter. One of the main reasons why one may not qualify for a loan is bad credit history. However viable your business idea may be, banks will never risk their operations by granting loans to a potential defaulter. So the first thing to do is work on your loan repayment history. Ensure prompt payment and constant or early communication in case anything comes up that might stop you from making payments.
Avoid taking too many loans
Every business person has the desire to grow as fast as possible. This mostly involves going for financing from the banks. Taking one loan after another is a definite no-no for a growing business. The probability of using business or commerce loans for personal use is very high with many loans. One loan should be able to sustain a business to maturity while on the other hand many loans might pose difficulty in re-payment thus ends in bad credit rating. This is why a business person needs to take a business loan that will be rightfully invested in the business.
Establish a relation with your financier long before you need the loan
As much as the balance sheet and all the records of a business are important in showing the financial strength of your business, having a personal relation with a bank manager or loan officer will work to your advantage when you will need another business or commercial loan to finance an expansion. This will give you the opportunity to explain to your financier your dreams in great detail and be convincing enough to get the loan. The best way of developing trust between you and your financier is being faithful in utility and payment of loan. This is the rule of thumb in not only this relationship but every other relationship under the sun.