“What Every Business Owner Needs to
Know About Dealing with a Bank”
When applying for a business loan, a banker will be looking for various warning signals, both previous and present. In order to eliminate the frustration of having to provide additional information, BE prepared ahead of time.
BUSINESS FUNDING – LESS THAN 3% OF SMALL BUSINESSES FIND IT … WHY?
A recent government study of U.S. small businesses showed that out of 15.7 million business loan applications, 97% were declined. Why? Because, every lender has underwriting approval guidelines that may include as many as 20 items and you have no idea what even 1 of them are.
Let’s look at a few …Did you know that lenders will decline your application if they can’t find your business legal name in 411 directory assistance? You may be declined if your bank account balance is below a low 5, what is that? You are most likely declined if you don’t have 5 trade credit accounts that report to the credit agencies. You’re declined if you don’t have a credit file number. The lender may require two years in business where “in business” was defined as the length of time your business bank account had been open. They might require your business credit score to be 70 or above. They may require your debt coverage ratio to be 5 to 1 or your FICO score to be above 680. You could be declined because your business is in the wrong industry. And then there are more, etc, etc, etc.
The reasons businesses can’t find funding are:
- They don’t know where to look for the “right” funding source.
- They don’t know how to pre-qualify before they apply.
- They don’t know how to successfully present their request.
- They don’t know that “miss just one thing” and they will hear NO.
- They don’t know that “shot gunning” will kill their chances.
- They never take the time to build a good business credit rating.
- They don’t separate their personal credit from their business credit.
- They don’t use or understand financial documents.
Financial Documents Traditional Banks Require for a Loan
Balance Sheet & Profit and Loss: It is reasonable to expect that privately-held companies meet the same standards required by the SEC for publicly held ventures. If the statements and the reports have dates that differ by more than three months, the lender has cause to question what has happened during the interim that you may not be telling him.
General Journal: if your general journal contains an unusually large number of adjusting entries to being the books in balance, this is an indication to the lender that you may have sloppy record-keeping during the year or that your business has something to hide.
Financial Records and Operating Control: If your accountant has supplied a management letter, it will indicate the quality of the records and controls. Otherwise it is up to the lender to verify that your records are adequate to provide correct information for running the business, and that your operating controls are sufficient to prevent embezzlement, fraud and other dangers to the business.
Inventory: A visit to your company’s warehouse will enable the lender to see if the inventory shown on the balance sheet is old, out of style, technologically outmoded, or unbalanced (for example, all spare parts and no completed products). The lender’s goal is to verify that the inventory is salable.
Current Posting of Records: Maintain your general ledger and other accounting records on a current basis. If you do not, it is a sign to the lender of sloppy record-keeping, which may affect your ability to make informed management decisions, or it may signal to the lender that your business has something to hide.
Customer Retention: The loss of a customer may not only lead to a change in the business’s historical profit levels, but may also indicate that the quality of your product or service, or its competitive position in its market has deteriorated. This is certainly an alarming sign that deserves further investigation.
Other Activities: If you are involved in a vague, highly speculative financial venture other than your primary business, it can endanger your solvency and also distract you from developing your primary business that is supposed to repay your loan.
Adverse Financial Trends: These include extended average age of receivables, changes in credit policies, concentrations of seriously past due accounts, increasing numbers of credit memos, and receivables from affiliate companies (these may or may not be listed with other receivables).
Be Realistic: While no entrepreneur expects his business o fail, the business owner who claims his company will be incredibly profitable with no facts to back up his opinion is a poor risk. Your management decisions must be based on facts that can be verified by your lender.
This Year 500,000 New Businesses Will Start- 400,000 Will Fail!
10 Reasons why Businesses Fail:
- Inadequate accounting records
- Disregarding or misinterpreting financial records
- Not controlling costs
- Inviting fraud through poor internal controls
- Improper planning
- Failing to sell aggressively
- Insufficient working capital
- Not carrying adequate insurance
- Failing to adequately train employees
- Not seeking advice or professional help when necessary.
6 Questions to Ask Yourself!
- Are your profits what they should be?
- Are your employees as productive as they should be?
- Do you “feel” that you are under control?
- Is your cash flow what it should be?
- Is your business your life, i.e. do you have a home life?
- Are you feeling the pressure?
Based on your answers to these questions you may need our help with your loans.
Introducing PBI Micro Loans a Short-Term Loan for
Small Businesses in Over 200 Industries!
Unlike banks our underwriters based their decision on the health of your company and cash flow and NOT credit scores. We provide real, attainable, affordable financing for small business owners like you. We don’t make you jump through hoops and can fund your business in just a few business days upon application approval.
- Loans from $5,000 to $250,000
- Terms from 3 to 18 months
- Fixed interest and fixed payments
- Approval in 24-72 hours
- Cash in a few business days
- More than 200 industries qualify
Is all that possible? Yes!
Finding business funding is an exact science and not something you just do in your spare time. If you decide not to use PBI services to help insure your success, then we strongly recommend that you do your research before you submit your first application. After just three (3) failed applications, all other funding sources will not want to do your deal because they will think there is something wrong with it. By submitting multiple failed applications, you will damage your credit and may destroy your ability to ever receive business funding.
There are only two ways to obtain business financing from a bank:
- One is by using your social security number and your personal FICO score to personally secure every business loan.
- The other is to use your business credit rating and get financing without having to personally guarantee every loan.
So now it is decision time for you.
We will pre-qualify you before you apply for free or you can apply everywhere on your own and be a real danger to yourself. So the choice is yours, ignore all the warnings and go it alone, or use us and get all the help you need.
Call us for a free financing quote and approval. EASY Application Process requires a simple one page application, 4 months of bank statements, plus your profit and loss statement. No hassles and no long waits for a response. Repayment also helps build credit history.
Click here for more information: http://www.prosperitybreakthroughs4u.com/loan-mastery/
We also offer a loan that repays its self program. Contact us for all the details.
“The man, who believes he needs help from no one,
quickly learns he has a fool for a partner.”
Wishing you tremendous success…