How to Get Approved for a Corporate Bank Loan
Posted on June 24, 2014 in Banks
Financing is something that consumes a business owner's time from the moment he wakes up until he finally is able to go to bed. It can get especially bad when there is a project going on that requires complicated financing arrangements with several different funding sources. One way to eliminate all of these problems is to get a bank loan to cover the costs. But business owners find that getting a bank loan is not always as easy as it sounds.
A corporate bank loan can require a complicated application process and an equally complicated funds distribution process as well. A business owner can reduce the stress involved with getting a corporate loan by knowing the steps necessary to gain approval on the financing he needs to run his business.
There are two schools of thought on the best way to get a good interest rate on a business loan. The first notion is to get as many lenders as possible involved and then choose the best deal. It is perceived that pitting lenders against each other results in a competitive situation that will always see the borrower as the winner.
The other method is to spend a great deal of time finding the right bank to do business with and then cultivating that relationship when it comes time to negotiate financing. The way that this plan works is if the borrower builds up to larger loan amounts by taking out several smaller loans to start. If you try to jump right into a relationship with a bank by applying for a large loan, then that could stall any progress you have made with establishing that relationship.
In reality, the best approach depends on what kind of business you prefer to do. Many business professionals find that a cultivated relationship with a lender makes sense because it helps the borrower to be able to establish a relationship that will lead to more financing arrangements down the road. You have to find the method that works for you, but it should be noted that relationships count, even in the business world.
You can speed up the loan approval process and tilt things in your favor if you enter the process with updated information in a format that you can present to the lender. You need to update your business plan and make sure that it contains all of the comprehensive information that the bank will need to see. Your revenue and costs projections for the next three to five years are going to be extremely important information when it comes to getting a corporate loan.
You will also want to get updated financials for your company so that the bank can see what you have accomplished to this point. Releasing financials to the bank for review can be a difficult process for some companies. That is why it is always best to have the entire process done before you start submitting your application information.
Have A Strong Cash Flow
A bank will want to see a well-managed cash flow before it will consider approving your bank loan. You have to remember that the bank looks at the loan as investing in your business. If an investor in your business is not comfortable with the manner in which you manage your finances, then he is not going to want to put any money into your company's future.
Many companies keep cash in their bank accounts specifically for long-term finance applications. In the corporate world, a strong cash flow means everything. The companies that understand how to manage their cash, are the ones that have little to no problem getting the bank financing they need for larger projects.
A corporate bank loan can help to consolidate all of your project financing into one vehicle. Before you reach out to a bank to try and apply for a loan, it is important to understand what a lender is looking for in a potential borrower in order to expedite the application process.
As you prepare to apply for a larger corporate loan, there are steps you need to take that will help to improve your chances of getting approved. Financing your company is an ongoing process that requires your undivided attention. The more that you put into creating a smooth bank loan application presentation, the easier it will be to convince a lender that your company deserves financing.