Steve Curvey’s Take on Small Business Loans

Many people who desire to open their own trade or to grow their current one need an support of financial capital at the beginning of a trade; as we all know, the critical reserve of sponsorship for entrepreneurs is trade lending.

There are some average blunders we make while applying for a trade loan or during the processing of the loan which can result in a denied loan application. I will try to present a few of them which will be helpful for you to understand what you need to be guaranteed that your next trade loan application will not be neglected or why yourearlier loan application was rejected.

Lack of planning

Before applying for a trade loan you need to do some study and make certain methodologies about how you are going to request your lender and how you can ensure that your loan application will not be rejected.

Do some homework — First of all you will have to decide the type of loan you need then do a good survey on the loan market and find out which bankers are best suitable for you. Make a list of them in the form of importance in the market in which you are in. It will help you find out who is most attracted in your trade and is wanting to help you accomplish. After you find the correct lender or bank, make it sure that the lender accepts your trade and what you’re aiming for.

Documentation Once the planning part is finished the next step concerned is collecting or organizing the required paper works. This step also needs to be done with a cool headed approach so that you can make sure all the vital documents are ready.
Keep this in thought that all acknowledgements in the application will need to have approving documents so make sure together them all.
The following are some of the documents which you will find vital.

Creditreport — A customer credit report is a authentic record of an individual’s credit payment history. Its main intention is to help a lender shortly and squarely decide whether to allow you loan. If your report shows a error, get in touch with the credit reporting firm and claim a correction. An explanation letter should be included with your loan application if your credit report shows legitimate late payments or bankruptcies, this can lower the negative consequences of these black marks on you while the processing of your loan application.

A professional looking business proposal

In addition to standard loan documents, a financier anticipates to see a written proposal when somebody applies for a trade allowance. This is your chance to make known the most exciting and promising aspectsof your trade and to show to your lender that you’re a prime contender for a loan. The proposal must constitute a description of your trade, the amount of funds requested it should also constitute why you are searching for the funds and the amount that you will donate. The proposal must tell how you are going to give back the funds.
This is what is supposed to serve as a basis for your loan application.

Tax returns and other financial papers.
It is required to be presented with your tax returns and other financial papers from the last two years – for both yourself and your trade so be sure you have them all ready before proceeding further.

Application Form Errors. The next step in the process is preparing the application. sure that no errors are there in this important step. Few of the common errors are.

Imperfect, False Statements, Incomplete Financial Disclosure, Unsigned and Undated Application, Illegible Writing, Handwritten loan documents and Lack of supporting documentation for the statements in the application.

Interview Mistakes

Once your application is ready the next step will be the meeting with the loan officer of the bank. Once the meeting begins be prepared for the following queries to be asked to. These queries are common in most of the loan interviews.

1. Why do you need the funds?
2. How much do you need?
3. What are your repayment plans?

So be in readiness to answer them correctly and in a method that will make the lender or the loan officer at last say “Yes, your loan is approved”.

You need to be prepared to explain to the loan officer about what are your strategies to make the maximum out of the funds given, it is also good to carry all those papers which will clarify to the lender why it is not risky to grant your application. Try to demonstrate to the banker about how perpetual your business is and your capacity to settle up the loan.
OK now let’s number the common mistakes committed during the interview.

1. Obviously, not being prepared enough to answer the above mentioned queries.
2. Not keeping a healthy debt-to-equity ratio — debt-to-equity ratio refers to the amount of cash you are borrowing in comparison to the amount you are investing, if you are not preparedto put in a good share of the funds in your project it can make your project look skeptical.
3. Not being prepared for the oppositions that the lender may increase-Answer all questions honestly and with sufficient documentation to support whatever statement you make. do not have enough data about a issues brought up by the lender just tell him or her that you will give them the required information soon as it is available to you and the lender back as fast as you feel that you can give the required information.
4. Showing a little certainty level — Get dressed neatly for the interview, make the lender convinced as if you are an entrepreneur who can and will pay back the loan if issued. You may hike the image of your trade by providing additional details about your trade, this can be done in the mode of essentials like handouts, writeups, press releases, appreciations, awards get etc.
5. Not discussing the risk constitute in your trade — All trade has a particular total of risk involved, and if you do’nt reason about it with the officer there is a great probability for him or her to think that you haven’t anticipated about the dangers involved with your trade. However it is recommended that you concentrate more on the positive points than the uncertain ones while talking to the lender. Tell the lender about the risks involved and illustrate why opportunities to meet with the risk are minimum.

various arguments for not accepting

Bad funds management

Bankers are always impressed with trade owners that manage their funds well. So if you are somebody with these qualities it is tough to get your loan approved:

– Frequent bounced checks
– Low bank balance
– Frequent overdrafts
– Late credit card repayments
– Have defaulted on earlier loans
– Accused for non-payment or late payment by suppliers

Not asking for acknowledgement from the lender who did not allow your claim previously

Whenever you meet with denial of a loan claim, ask the lender or investor to provide you with some acknowledgement or the explanations why he or she turned it down. This can help you in fixing those facts before you go to another lender.

So, next time you plan to apply for a trade loan make sure you device all the steps in the operation properly and that you are not engaging in any of these mistakes. If you do so then your claim will be dealt with out any problems and the acceptance without any holdups or objections.