How to get your bank loan approved

How to get your bank loan approved
You might find it increasingly difficult to get a loan for your business. So, here are some steps to take before entering a bank for a business loan. Raising capital for your new business is often the hardest part of setting up your enterprise. One would imagine that it’s easiest to get a loan from your family, friends or even your own savings. But, in your quest for the easiest loan, don’t rule out financial institutions.

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If you don’t have a track record for a bank to judge you by, it could be very difficult to secure a bank loan. In order to offset their risk of giving you a loan in such circumstances, banks will cite the growing cost of servicing accounts as small as yours as the main reasons for reducing their exposure to small enterprises. Despite all these apparent problems, you can still avail of a bank loan in these ways:

• Is your bank familiar with your industry? Choose a bank that knows how your industry works. This will increase your chances of getting a loan from your bank. If your bank finances small concerns, you could benefit from this. Some banks ask for steep collateral for start-ups, so be careful that yours doesn’t do this.
• Know the details of your project before you see your banker: You must know all the ins and outs of your project before you request a loan from your bank officer. Speak confidently and project the fact that your loan is of low-risk to them. Go with a completed loan application form, copies of your cash flow and financial statement projections of at least the next three years and your covering letter.
• Be prepared for every question your banker may ask: Go so well prepared for your meeting with your banker that you can even anticipate his or her questions. Learn to negotiate with the power of information and preparation. If you’re confident and are sure of your facts, you stand a better chance of having your loan approved than someone who can’t answer his banker’s questions.

1. How much money are you looking at? Be exact to the penny, and add on a little more for emergencies.
2. How long will this money be needed for? Go into all the details of the money and the extent to which it will serve you. Impress upon the banker that your business is low risk.
3. How will you use the money? Will you buy new machinery, set up a restaurant, invest in a kitchen, or a computer business, to pay for old debts or for your running costs.
4. How do you plan to repay the loan and when? Is there a time frame incorporated in your cash flow projections? You need to take the banker into confidence and convince him that your business will be profitable in the long run and that you do have the capability to repay the loan, based on your financial projections and your business plan.
5. Ask yourself what you will do if the banker refuses you the loan.
6. Don’t develop a negative attitude, but introduce yourself as an entrepreneur who has the ability to repay the loan. To convince your banker of this, show him your business brochures, articles in the press, ads, press releases, etc.
7. Dress formally and look professional—after all, you’re going to transact a business deal, as it were.
8. Don’t exaggerate in your application. Stick to the truth as it’s going to be verified. Give supporting evidence f every statement you make.
9. Don’t insist that the loan officer take a quick decision at the meeting. No one can decide without confirming that your documentation is complete.
10. Meet as many lenders as possible, until you do get your loan. To improve your chances of securing a loan, ask an entrepreneur for a referral. Look for a contact within the bank who can push your case forward.
11. And finally don’t get disheartened as the first loan is always difficult to get. This is because bankers prefer to lend money to those they’ve already lent to before. Like anyone else, they too would prefer to work on low risk cases.

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