Lending for trade and industrial purposes are increasing day by day as far as large companies are concerned, but in accordance with the index of Small-Business Lending, the lending of bank loans to small enterprises or small business holders has shown fluctuation over the last few years.
And, as a known fact, owners of small-businesses are unknown about what the year 2013 holds for them, their businesses and the country’s economy. Truth be told, the latest report by the Independent Business Federation says that the optimistic attitude of the people towards small businesses is still found to be low.
James Walter CEO of BBC Easy says that banks are ready to make loans for small-business. The issue is that many banks are unable to locate the deserving borrowers, who even meet the minimum standards laid by lenders. As the matter of fact many banks are using technologies which are outdated, one should be more organized, so that approval can be received faster.
If there is required of credit or temporary need of cash for business activities then availing loan may be tough in our growing economy. When banks evaluate the credit stature of a person there are different variables that play important role in the evaluation. Walter and Corey Ross, provide you with the following tips for availing loan easily.
1. Place all the documents and finances in order.
Generally in order to apply for a bank loan or SBA loan, a business should run in profits for the last three consequent years. Prior to any decision, most lenders will carefully study your credit records of the past few years, so you should always monitor your credit score and credit report. In addition, the credit report should be true; it should not hold anything that might prove to be a sore point.
Remember, almost every bank will ask that you provide a personal guarantee for the eon personal loans, but if the collateral is sufficient within the bounds of your business to cover the principal amount, then they should not hold on to your home articles.
2. Tell why your business is in need of loan.
Walter says- As the being a part of a lending company my experience tells that the most prominent error made by the applicants was not revealing why their business or company is in need of the loan and they would also not tell why their loan should be approved even when they are unable to meet our required criteria.
Is there a sudden growth in your business? Are you entering into partnership with any major firm or retailer? What’s your story to apply for a loan?
We should be thorough with our documentation and should not only specify past success but future prospects also- explains Walter.
3. Go for the details and schemes.
A bank will not be interested in hearing you if your business has failed to run in profits for the past three years. If you lack sufficient collateral in order to provide security for the loan then the company might fail to acquire the loan.
As suggested by Ross- One should visit a bank and make queries regarding SBA loan also. Under the SBA loan program guarantee can be given by the government up to 80 percent of the loan amount, some banks are more liberal. The drawback of this process is lengthy paperwork and the bureaucratic interference.
4. For temporary needs look for alternative sources of financing.
Sources for alternative financing are increasing as companies which are known to be profitable or are at growth-stage face shortage in the available means.
In the words of Ross-Lending in the form of asset and factoring is suitable approaches for numerous small business holders.
In factoring, a business holder sells his receivables to a factor who makes an advance of 70 to 80 percent of the value of the receivables. Lending based on assets is similar to the process of lending through traditional loan, where the credit worthiness is determined by evaluating receivables, inventories and fixed assets to issue the credit limit. If you do not qualify for traditional bank loans, then one can opt for these alternatives. The interest rates of these alternatives are higher than a traditional loan.