If your a business a loan from your bank is painful and can be a delicate process. While lending money is one function a bank performs, it is a very important part of a bank’s services to your business.
Banks have stringent business lending criteria that are strictly adhered to. In order to secure your business a bank loan, it is important to understand and fulfill all the requirements.
Banks generally need to see your business plans for the next three to five years which will inlcude cash flow forecasts. This gives them an idea of the business its financial plans and enables them to assess your ability to repay the loan. In order to get free business banking and your loan approved you must convince the bank that the risk involved is not high.This may involve the owner or Directors proviving a personal gurantee
This basically means that as a new business and as a first time borrower you may only have the option of a secured loan. Secured loans are loans where the borrower puts up collateral against the amount borrowed, not good if your business doesn't work and you personally have to pay your bank back. This reduces the bank’s risk, as the borrower stands a chance of losing their collateral in case they fail to repay the loan.
While applying for a loan, it is important to understand and know the requirements of the bank. Ensuring you have your business forecasts and plans in order and making sure it meets the needs of the bank will increase your chances of securing a loan.
Credit history is an important factor as it helps the bank to decide whether the business qualifies for a loan. Making sure that your credit report and history are good will increase your chances of smoothly securing a loan as will upto date financial accounts.