Steve Curvey Shares His Views About Possible Problems Associated with Business Loans

By: Steve Curvey Posted on: 2007-09-05 ** Print Article ** ** Copy Article ** - Category Feed

Article Summary: Many people who wish to begin their own trade or to extend their existing one require an injection of financial capital at the starting of a trade; as we all know, the essential reserve of venture capital for business persons is trade lending.

Many people who aspire to open their own trade or to grow their existing one need an supply of financial capital at the starting of a trade; as we all know, the main source of funding for businessmen is trade loans.

There are some accepted mistakes we make while applying for a trade loan or during the processing of the loan which can land up in a rejected loan application. I will try to present a some of them which will help you understand what you want to be guaranteed that your upcoming trade allowance application will not be rejected or why yourearlier loan application was sidelined.

Lack of planning

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

Do some homework -- First of all you will have to decide the kind of loan you need then do a good study on the lending market and find out which lenders are best suited for you. List them in the form of interest in the market in which you are in. It will be helpful for you to conclude who is most interested in your trade and is wanting to help you accomplish. After you find the correct banker or bank, make it sure that the banker understands your trade and what you're aiming for.

Documentation Once the plans are accomplished the next step concerned is collecting or arranging the vital paper works. This step also should be done with a cool headed technique so that you can make certain all the vital documents are ready.
Keep this in thought that all declarations in the application will need to have confirmatory documents so make sure together them all.
The following are some of the documents which you will find vital.

Creditreport -- A consumer credit article is a factual record of an individual's credit payment history. Its main intention is to help a lender quickly and objectively decide whether to accept you loan. If your record shows a mistake, get in touch with the credit reporting agency and claim a correction. An account letter should be included with your loan application if your credit record shows legitimate late payments or bankruptcies, this can lower the negative impact of these black marks on you during the processing of your loan application.

A professional looking business proposal

Other than standard loan documents, a lender anticipates to see a written proposal when somebody applies for a trade loan. This is your chance to highlight the most exciting and promising perspectivesof your trade and to establish to your banker that you're a prime contender for a loan. The proposal must constitute a description of your business the amount of funds asked it should also constitute why you are seeking for the funds and the amount that you will donate. The proposal must tell how you are going to give back the money.
This is what is supposed to serve as a foundation for your loan application.

Tax returns and other financial papers.
It is essential to be ready with your tax papers and other financial documents from the last couple of years - for both yourself and your trade so make sure you all of them ready before going ahead.

Application Form Errors. The next step in the process is preparing the application. It should me made sure that no mistakes are there in this vital step. Some of the simple mistakes are.

Partially Filled Application, Inaccurate 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 you have your application ready the next step will be the interview with the loan officer of the bank. Once the interview begins be prepared for these queries to be shot at you. These queries are common in most of the loan interviews.

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

So prepare yourself to answer them correctly and in a manner that will make the lender or the loan officer finally say "Yes, your loan is granted".

You must be ready to explain to the loan officer about what are your strategies to get the most out of the loan given, it is also advised to carry all those documentations which will make it clear to the lender why it is not risky to approve your application. Try to convince the lender about how perpetual your business is and your capacity to pay back the loan.
Fine now let's number the common errors committed during the interview.

1. Obviously, not being ready enough to answer the above mentioned queries.
2. Not maintaining a healthy debt-to-equity ratio -- debt-to-equity ratio refers to the amount of cash you are seeking compared to the amount you are investing, if you are not readyto invest a large part of the funds in your business it can make your business seem unbelieving.
3. Not being prepared for the oppositions that the lender may raise-Answer all interrogations honestly and with sufficient records to support whatever statement you have made. do not have sufficient records about a issues brought up by the banker immediately inform him or her that you will provide them the vital records soon as it is available to you and the banker back as fast as you are convinced that you can provide the vital records.
4. Showing a little certainty level -- Dress professionally for the interview, make the lender feel like you are an business person who can and will pay back the loan if allowed. You may increase the image of your trade by giving additional points about your trade, this can be realised in the form of materials like handouts, writeups, press releases, testimonials, awards get etc.
5. Not discussing the risk contained in your trade -- All trade has a certain total of danger involved, and if you do'nt consult it with the officer there is a high chance for him or her to think that you haven't deduced about the dangers involved with your trade. However it is advisable that you channelise more on the positive sides than the uncertain ones while speaking to the banker. Inform the lender about the gambles contained and illustrate why chances to meet with the dangers are less.

various arguments for rejection

Improper funds management

Financiers are all the time amazed with trade proprietors that manage their funds well. So if you are somebody with the following problems it is hard to get your loan accepted:

- many bounced checks
- Low bank balance
- Many overdrafts
- Late credit card repayments
- Have defaulted on earlier loans
- Sued for non-payment or late payment by suppliers

Not appealing for feedback from the lender who denied your claim previously

Whenever you meet with rejections of a loan claim, ask the lender or investor to submit you with some feedback or the explanations why he or she turned it down. This can help you in correcting those errors before you approach another lender.

So, the succeeding time you plan to apply for a trade loan make certain you plan all the steps in the process carefully and that you are not engaging in any of these mistakes. If you do so then your application will be dealt with out any problems and the acceptance without any holdups or objections.

Article Source: http://www.upublish.info

About the Author:
Steve Curvey
Steve Curvey is a business expert that specializes in growth acceleration through outside investment. You can read Steve's newest book about getting a business loan here http://www.businessplanforbusinessloan.com/

Keywords: business, business+loan, business+plan

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