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Bank loans can be convenient ways for business owners to pay for growth projects, launch significant marketing campaigns, and fund the research that leads to innovative new products. The best way for a company to fund any of its operations or projects is with its own cash flow, but that is not always an available option. If a company sees an opportunity to make a move on the marketplace and take up more market share, then it has to jump at that opportunity and use bank funding to make it happen. There are the right things to do to get approved for bank funding, and there are the wrong things to do. A proactive business owner always looks for new ways to expand his financial options and deliver the bank funding his company needs to succeed.
Always Expand Your Network Of Financial Contacts
If you are meeting a loan officer for the first time when you sit down in his office to discuss your capital funding needs, then you are in for an uphill battle. Proactive entrepreneurs are out networking with other professionals and making the kinds of business contacts needed to secure capital funding. You need to be out circulating at civic functions, meetings of professional organizations, and as part of local groups of business people who are active in the community. You need to always have business cards on you and be in situations where you can use those business cards to expand your network of financial contacts. Many small business capital loans start on the golf course or at the dinner table of a community function.
Have An Updated Business Plan Available At All Times
Your business plan is what guides you when you need to make important decisions concerning the future of your business. More importantly, your business plan speaks on your behalf when you are not there to talk to banks and bank officers. You should have created a business plan when you started the company and you should be updating it quarterly. The business plan will tell a bank exactly what it needs to know to make a decision on approving funding. Your business plan outlines your revenue projections for the coming years and it also shows that you have put a lot of thought into the consumer trends that will shape your business in the future.
Look At The Bank As An Investor
One of the problems that business owners run into when they go to get a small business bank loan is that they consider the process to be automatic. When you take the loan application process for granted, you tend to lose out on the funding that you need. Too many business owners think that all they need to do to get approved for a loan is fill out the application and wait. A bank is just like any other investor in that it is interested in the success of your company. If your company does not succeed, then you cannot pay back your loan. When you present your information to a bank, then be as thorough as you would be to any other kind of investor and you will increase your chances of getting funding.
Always Keep Your Options Open
Bank loans are like any other financial product in that you should comparison shop before you make a final decision. Pitting banks against each other to see who is willing to give you the best deal may take a little longer, but it can save you thousands of dollars in interest charges and other fees in the end. Put that network of financial contacts to work when you are looking for a bank loan and always compare the offers you get to make sure you are getting the best offer. Remember to always apply a little pressure to each lender to make sure that they are giving you the best possible deal.
Your Company Is Your Prime Concern
Bank officers make commission on the loans that they approve for businesses just like yours. Some lenders run promotions for their officers which offers a little higher commission for certain kinds of loans. If you feel that a loan officer is trying to push you into a loan that you know is not right for you, then walk away from that deal. You are not in the business of making the loan officer a little extra commission for the month. You are out there trying to find the best possible deal for your company and get the capital funding that your business needs.
Know What You Will Be Financing
Part of the application process for your small business capital loan is explaining to the lender why you need the money. Once again, this is not something that you should skimp on in terms of information. If you are looking to make an investment in an expensive piece of equipment, then give the lender all of the details about the equipment and exactly how you feel it would help your company. If all you have to submit with your loan application is a general overview of a vague need for funding, then it is unlikely that the lender will approve your application. But when you can submit specific information on exactly why you need the money, then that will help your chances of getting approved.
Have A Financing Structure In Mind Before You Apply
It is always easier to negotiate a capital loan when you have something to compare the bank's offer to. If you are unfamiliar with how capital loans work, then now is a great time to learn. The more you can educate yourself about the structure of a capital loan and how they work, the stronger your position will be when negotiating with the lender. Understanding the general structure of a business capital loan will also help you to identify any issues with the bank's offer. For example, if you are familiar with the fees associated with capital loans, then it will be easier for you to spot any potential hidden fees and then discuss them with your loan officer.
Try To Build A History With A Bank And Loan Officer
Anytime that you can do business with someone who is familiar with the growth of your business, you are going to get a better deal from that person. When it comes to capital funding for small businesses, it is always in the best interest of the business owner to establish a relationship with a lender and, if possible, a particular loan officer as well. A financial professional with a comprehensive understanding of your business will be able to work with you and even speak on your behalf to the bank to try and get you a better deal. It is always a good idea to make strong business relationships with people in a position to lend your business operating capital.