Your financial standings are the most crucial part of your business. You know you need to be set up to get a business loan. As a small business owner, there are probably some things already standing in your way. But don’t let yourself be your own worst enemy.
Forgetting or Withholding Collateral
You can look at it this way: whenever someone loans you money, they’re taking a risk. They need to feel secure in who they’re lending their money to.
Commercial loan officer David Vernich said, “We need to take safe, prudent risks with the depositors money to make sure we get it all back plus interest.”
If you deliberately withhold information from the person you’re lending to, they will find out. SBA lender Sameer Shah said, “I have seen situations in which the business or the guarantors hid or didn’t report certain assets. While it’s often something they can often get away with, it’s unethical and can be a serious issue in the case of default.”
Not Being Able to Prove Your Cash Flow
For every dollar that you’re in debt, you should be able to prove $1.25 of cash flow. When lenders see this, they’ll feel at ease that you’re going to be capable of paying them back.
Be able to prove it by having proof or projections of cash flow on hand, a personal financial statement, and your last three years of personal and business tax returns.
Not Knowing What You Want to Borrow
You could just be thinking that you want to ask for the max amount. But that’s not always the best way to go into a loan. Plan your growth, and make sure you’re not about to go into debt that you simply can’t get out of.
Going In With Unclean Credit
“A successful business doesn’t negate a poor personal or business credit score,” says Senior SEO Associate Nicolas Straut with Fundera. If you’re dealing with credit payments or paying off other debt, you’ll have to have enough revenue to offset it. If you don’t, it will be difficult to get a loan. Lenders are looking at numbers, numbers, numbers. They just want to know if you have the numbers that will show you can pay off your loan.
Not Having a Down Payment
It’s a good rule of thumb to always have a down payment of ten percent prepared. It might not always be required, but it’s often asked for. However, just the fact that you’d be able to have it shows that you’re in good financial shape and probably prepared for a loan.
At TopMark Funding, we’re on your side. We want you to get the loan that you want. So contact us today, and we’ll let you know your options. When you work with us, you can’t make any mistakes.