Are you looking for a bank loan? Well, if that is the case, the bank will want more from you before they give you a loan. One of the things you should know is that banks don’t put their money on business plans (Axofinans.no). It’s against any banking law. It must be noted that banks are handling depositor’s money. Hence, would you want your bank to invest your hard-earned cash in startups? The answer is straightforward, no. But if the startups have what it takes to pay back the money, they can be considered.
This bank will consider the following before giving you money;
1. Purpose of the money
Here, you are required to have a business plan. With you business plan, next task is to convince the financier that your business is dependable, meaning, the track record of your business should be robust in terms of performance. In other words, you should convince the lender that you don’t his money, but if you had it, you would do an outstanding job. Banks are very skeptical of desperate borrowers. Be specific on the amount of money you need, the purpose, and how you will pay it back.
This means that your business should have a hard asset when seeking a loan. Banks are cautious with collaterals; they have to be worth the risk. The collaterals can form personal properties such as land and building and stock market shares.
3. Your credit profile
This is one of the essential aspects when it comes to money lending. Financiers don’t want to give their money to defaulters or fraudsters. Therefore, your credit scores and reports will significantly determine whether you can apply for a personal loan. If the records are reliable, the lender will have no problem to give you a loan. However, if the reports and scores are wanting, count yourself unlucky.
Remember, it’s all about mitigating the risk. Banks will always ask for insurance of the business to know whether the company has taken enough risk measures to curb any eventuality. If the business is well insured, it shows you are serious about it, and you are doing your best to ensure it survives. This way, banks will take you seriously and can do business with you.
5. The financial details of the business
The business details include net worth, social security numbers, assets and liabilities like vehicles, homes, credit accounts, investment accounts, mortgages, auto loans, and many others.
If the business has multiple owners, the bank will demand the financial details of the other owners. This way, the bank will determine your cash fluidity. If you have good fluidity, then the lender will have no other reason to deny you money.
Do you need a loan for your business? If yes, you should put your house in order. What does this imply? Don’t go for the bank money if your financial records, especially the credit score is wanting. That is equivalent to wastage of time.