Whether you are just starting up or have an established business with tight slow cash flow, you will turn to banks in hopes of obtaining a line of credit. Unfortunately, we have all learned that when you are not in search of extra credit, calls from bankers keep coming in, yet when you are in need of credit, these banks and credit card providers are hard to find. Are you wondering why this is? Do you feel that it is so easy for other people to get a loan and for some reason it just won’t work for you? Here are a few tips to turn that “no” into a “yes”.
#1 – Have you done your homework?
Before even thinking about applying for a loan, you MUST have your financial statements up to date and have them reviewed by a CPA such as BusinessWise CPA, accountants in Maryland. The numbers on your financial statements must reflect the narrative you would like to present to the bank. You should also have your tax returns that go back at least 3 years. It is important to show that you are filing these returns to also avoid any compliance or credibility issues. Our locally outsourced CFO Services can help you always be aware of your financial situation.
#2 – Do you have a business plan?
Be clear on what your current business situation is, where you would like it to be in the next few years, and your plan to reach that goal. Know the exact and minimum amount that you need from the lender. If you don’t know how much you need, how is the bank supposed to know? It is your job to do your research and figure out what the cost of your goal is. A loan is meant to serve a purpose that will lead to tangible improvements in your business – it is very important to know the exact uses of loan funds prior to taking on this liability. It is also very important to structure a loan correctly so that you have an appropriate amount of time to pay it back.
#3 – Who do you approach?
At the end of the day, banks are looking to make a return on their investment and it is in their best interest to make loans in order to continue generating interest income. Your loan transaction will certainly help them achieve this goal. If you have a well thought out request, they will certainly entertain it further. Banks are institutions that have strict rules, bylaws, and guidelines that they have to adhere to. If they do not see that you have a feasible plan to grow your business and pay off the loan and your financial statements do not reflect a positive history, they answer is going to be no. Do not ask for an amount you cannot realistically afford – they can obviously see this in your financial statements. With BusinessWise CPA’s Financial Consulting Services, you will have a compass to guide you along the way.
#4 – If not the bank, where else can I go?
There are organizations that are not banks but are engaged in the business of providing capital. These lenders are more likely to take entertain a riskier loan request as long as you can justify your ability to repay the loan. You will still need your financial statements, tax returns and other pertinent information to demonstrate your creditworthiness. These lenders can reach a decision more quickly as they do not have a huge hierarchy of executives to pass it through and are not as tightly regulated. With BusinessWise CPA’s Capital Formation Services, we will recommend the ideal source of income for your firm.
#5 – What if I need a small loan?
Microlenders are generally community oriented smaller loan lenders. They work with loans under $50,000 for various purposes including purchasing equipment, marketing, etc..
#6 – Angel Investors and the Government
If you are lucky enough to have connections, leverage them as best you can. These sort of people can be your Angel Investors who will see your dream from your perspective and could help you get there financially. If you are not so fortunate, you can acquaint yourself with them by joining Angel Investor groups, networking groups, and putting your company’s imprint everywhere you go. The more people see your face, the more your name will get out there. The Government is looking to improve the growth of small businesses and has several loan options for different purposes. The Small Business Administration is a prime source for these and has created several loan programs to promote the economy and increase jobs.
If you still are having trouble, consult a CPA like BusinessWise CPA who can be your business partner to help you achieve your goals as soon as possible.
For more information on how you can finally achieve that loan, contact BusinessWise CPA today at 301-960-5830 or email us at firstname.lastname@example.org