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Posted on 10/07/2018 in eCommerce & Internet Marketing

Dealing With Banks For A Small Business Loan.

Dealing With Banks For A Small Business Loan.

The idea of starting your own business comes with heightened optimism when you think of financial independence. But even though you may have a smart idea and the best marketing strategies to become successful, without funding you it’s hard to get off to a good start.  Your projection of the capital needed may have been underestimated because of unexpected expenses.  

Not having the finances to meet those demands can be frustrating and disappointing to some extent.  If you’ve just launched your business, it may be too early for you to start seeing profits which you can re-invest into the business.  Unless you are born with a silver spoon and have money saved up for you to tap into, you are going to need financial help.

From administrative costs, to marketing and advertising, everything that lays a strong foundation of a successful business requires expenses.  Not having these building blocks can stall your effort and you will not be able to grow and expand.  So based on your situation, you may want to consider whether taking out a small business loan is the right thing to do.  Before opting for small business loans here are some things you need to know.

1)  Taking out loan will help get a lot of things accomplished.  But if you don’t have good credit, it can be difficult to approval.  Banks usually do not give out loans without checking your credit score.  And if doesn’t meet their expectation, you most likely will be denied.  If you do get approved, be prepared to pay a very high interest rate.  

2)  Because of the paper work involved, the process can be stressful and time-consuming, leading to frustration in some cases.  The best approach is to research and get all the information and documents the bank may potentially ask for, including your business plan.  Personally, I would consult with a financial adviser before starting the process.

3)  In order to get approved, the banks expect you to have been in business within a period of time. Usually, the requirement should be one or two years with stipulated annual revenue.  

4)  If collateral is involved, you may end up loosing it if you’re unable to pay back your ln for whatever reason, and may end up being sued.  

How To Position Yourself To Be Eligible For A Bank Loan

If you know your business is worth $100,000 at the time of applying, do not ask for an unreasonable amount.  Make it as reasonable as you can so that when the bank review your application, it would be easier for them to make a determination that you can pay back the money.

To be on the safe side for eligibility, make sure your credit score is at least 680 if not higher. 

Talk to a Loan Specialist and find out what the criteria is for eligibility and repayment of the loan before applying.  Don’t wait till you get denied before realizing your mistakes.  When dealing with the banks, you have to be thorough.

Be prepared to show proof that you are in a position to repay the loan on time by presenting your financial Statements showing that your income exceeds their expectation.

Always research and prepare well when dealing with the banks.

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