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Ways to get bank financing to go more smoothly
Find a bank that can grow with you-when looking at lending institutions to finance you; try to find a bank that is as flexible as possible.Your business will grow and your needs will change.Don't lock yourself (and your company) into fixed lines of credit or other non-flexible terms.
Have all the facts about the company-when you go to apply for bank financing, come prepared.You will be asked about the nature of the business and the nature of the competition.Do your homework or hire someone to do this homework for you.You should be able to show the business plan and include the strategies that you will use in the plan.Have an organization chart and the resumes of the key people on that chart.Be ready to answer plenty of questions about how your business is going to run.Be ready to show the experience of your management team, the accounting system that you will use and the way your finances will be tracked, organized, and reported. Have collateral-you have to have money to make money.If you are trying to get bank financing to expand your business, get as much money as you can in the bank.Don't use your positive cash flow to finance your business directly.Instead, bank your positive cash flow and use that money to borrow money.Banks will be more likely to lend you money if you already have money, so keep your cash as cash when you are trying to borrow money.If you are looking to start a business, the more liquid assets you can accumulate, the better your chance for receiving a bank loan. Continued financing-once you have been given the initial okay, your work with the bank is not yet finished.Banks have quite a bit of flexibility when it comes to their relationships with businesses.Maintain a good relationship with your lender by disclosing financial details.Even if it isn't required, send the annual business report to your financial institution.If the people in charge at the bank feel good about the people in charge at your company, they will be more likely to engage in higher risk lending.Similarly, let the bank know about potential problems well in advance.Just not paying on your loan is a great way to ensure a foreclosure on your business.Talking to the bank and letting them know the details of your situation is a great way to ensure second chances and flexible payment schedules. |
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