Obtaining a loan from commercial banks is a tiring process. You would need to fill tons and tons of papers and present a long list of documents. When you want to apply for a loan, it is vital to be very thorough in your details. Prepare the best application possible and give it your best choice like it was the only source of funding for your business.
Leaving out vital details is one mistake loan applicants make
Some loan applicants go through the process in a shabby manner and when they face multiple rejections, they conclude that the banks are being unnecessarily mean. Industry specific details are one thing they often fail to include in their application. Industry specific details help the lender have an idea of what your industry or business is all about and can be enough to convince them to give you the loan.
Make your executive summary concise but rich in details
The process of loan acquisition often begins with an executive summary. An executive summary is like a cover letter where you introduce yourself and your business. Let the document show details of how the loan will be utilized, how it would help your organization and payback plans.
Small business profile should show your business background
Business background here refers to the history of the business. A proper business profile should provide answer to the following questions: how long has the business been in existence? How much sales do you make a year? What is your employment capacity? Do you have competitors? What is your customer base? What are the future plans for your business?
The applicant must include the intended plan of using the loans
It is unlikely that a bank would want to give you a loan if you do not give them sufficient details of how you intend to put their loan in use. The truth is that the safer your investment is, the better they can sleep with their eyes closed knowing that you would pay back. No one in his normal sense wants to throw away money into the bush.
Your business experience can work for you
Your experience running a business has a section where you have to tell the lender the amount of experience you have running a business so that they can be sure that you can properly manage their money. Like a well written curriculum vitae, list out the experience you have running a business and it may fetch you that loan.
You should carefully select your collateral
The collateral section allows you to pen down all the assets you want the bank to hold in exchange for your loan, just in case you default in paying back, they can sell the asset to get back their money. Therefore, it is important to choose your collateral carefully.
You must have a good business and financial record
Your financial statement and that of your business are likely to be scrutinized. Make sure this information is available and up to date. If you do not have a strong financial statement, the bank would doubt your integrity.
- The process for obtaining a loan is a long one.
- Loan applicants make the mistake of leaving out industry specific detail in their application.
- Banks would want to see how long you have been managing the business.
- Your executive summary should be brief but well detailed.
- A bad financial statement will cast a doubt on your loan application.
- Be careful what you choose as your collateral because it would be collected if you default.
- Repayment should be at the back of your mind when seeking for a loan.
- Banks will ask for a detail of how you intend to utilize the loan.
- Small business would need to provide the history of the business.
- Industry specific details can guarantee you a loan.
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