Recently I had a discussion with Bernard Samuel, Jr.,MBA, Senior Vice President of Sunovis Financial Services, about what to do and where to go when you can’t get a small business loan from your bank no matter what you do.
He told me that banks generally deny more than 80% of all business loan applications.
He told me that sooner or later most small businesses need to get a small business loan, whether to get the operating capital for business startup or to finance an expansion. But whether you’re approaching a bank or a friend for a business loan, the lender will have the same expectations.
He went on to explain that you can greatly increase your chances of successfully securing a business loan by being prepared to meet the lenders expectations. Put yourself on the other side of the desk for a moment. If someone asked you for a small business loan, you’d want to know exactly why he or she wanted the money and what the chances were that he or she would repay the loan in full and on time.
He said, “being turned down for a small business loan can really cause some damage when it comes to your dreams. Most of the time when a loan is denied, the business owner will lose out on the business opportunity that they want to fulfill. But, there are many ways to get a small business loan after being denied a small business loan by a bank.”
Here’s What to Do If You Can’t Get a
Small Business Loan from Your Bank
1. Start Over and Get Prepared Properly to Apply for a Loan With New Funding Source
The key to getting a loan is preparation. First, gather together the documents that will help persuade the lender that a business loan is necessary and that you are a good risk. You will need:
A business plan – The business plan show the lender not only why you want a small business loan but what you plan to do with the money.
Cash flow projections – What’s the first question any lender has? Will you be able to repay the loan? Your business’s cash flow projections give lenders concrete financial data that they can use to assess this risk. You must establish your “working capital” calculation.
A statement of your personal financial status – A list of your personal assets and debts to give the lender a fuller financial picture.
You may also need these documents:
Past business tax returns – If your business is established and you have past business tax returns, it’s a good idea to take them with you. They’ll give the lender a better idea of how your business is doing financially.
A credit rating report – Basically, you establish a credit rating by buying things on credit and paying back the money you owe. Your loan repayment history plays a big part in establishing your credit rating, but all your “credit” dealings make up the history that’s used to determine your credit rating.
It’s not necessary that you include a credit report with your small business loan application; it’s easy enough for potential lenders to check your credit rating. But if you don’t know what your credit rating is or suspect your credit rating is tarnished, you may want to get one.
You can get a credit report by contacting one of the three credit reporting agencies in America. To receive your free credit report, you will need to mail or fax one of these companies a request along with copies of two pieces of I.D.
The credit report you receive several weeks later will include information on what to do if you find errors in the report. If you have a poor credit rating, you will want to take steps to repair your credit rating before trying to get a business loan.
Now that you have all the documents you need, how do you actually persuade the lender to give you a small business loan? Continue on to the next page for tips on making a winning business loan presentation.
The next step in getting a small business loan is to persuade the lender that your business is viable and you are a good credit risk. You need to prepare in advance to make a winning loan presentation.
Start by considering the lender’s point of view. You want money. But he or she is most interested in the answers to these two questions: “What are you going to do with the money?” and “Are you a good risk?”, and t o make a successful business loan presentation, you need to come up with the “right” answers to these two questions.
Answering the first question means being fully conversant with all the details of your business plan and being able to point to the relevant financial statements, charts or graphs that will help convince the lender that you need the amount of money you’re asking for to do what you want to do.
Answering the second question means having already given some thought to the credit risk you represent to the lender and being ready to address his or her concerns.
To get a small business loan, be prepared to tell your potential lender:
What collateral you have – Collateral refers to the tangible assets that you are willing to put up to secure the loan. These assets might be equipment, a house, a car – something of value that you own. If you fail to repay the loan, then the proceeds from the sale of the assets is used for repayment.
How much money you’re personally willing to put into the business – Being willing to risk your own money shows the lender that you’re committed to the enterprise.
Your expertise and/or experience in your chosen field – Because the success of your business is dependent on this to some degree, any potential lender will want to know more about you. Be prepared to talk about yourself when you apply for a small business loan – your background, your expertise, and even your aspirations.
Your chances of getting a small business loan will be greatly improved if you have all your documents in order and are prepared to assuage the lender’s concerns about loaning you the money. Think of it as a presentation to an important client or customer, and you’ll have a better chance of success.
2. Try Renegotiating the Loan
If you are not qualified for a the amount that you negotiated the loan for, you may want to see if you can renegotiate the loan down to a loan amount that your business can qualify for. This won’t always work but it is worth the try, especially in today’s market.
3. Get Rid of Your Debt
The more debt you have in your business, the less loan you are going to qualify for. Debt includes credit cards, car loans, student loans, and any other consumer debt. Getting denied for a loan for having too much debt is may actually be a blessing in disguise. It can help you wake up and realize that you need to pay off some of this debt if you want to have dreams of building your business. Look at your debt and your income and make a plan as to what you can pay. Only after have you paid off some of your debt should you go back out and look for another business loan.
4. Check Your Credit Report for Problems
Any late payments, missed payments, or payments in collections can really come back to haunt you when you apply for a loan. Get a copy of your credit report from the lender who turned you down for the loan, since they already have a copy and this way it’s free to you. Check over your credit report to see what exactly the problems are with it that that you got denied for the loan. If you only have a couple of problems, you may want to call around to other lenders and make them aware of the credit report and see if they will approve you, as not all lenders have the same standards.
Sometimes there may even be a mistake on your credit report and that is why you did not get the loan. The only way you can fix any mistakes is to call the credit bureaus and tell them the mistake, so that it can be taken off your credit report.
5. Offer a Higher Collateral
Offering a higher collateral only works if you have the money to offer. If you don’t have more collateral to offer, then you will want to wait awhile longer before getting a loan and save money and improve your credit.
6. Get a Cosigner
A cosigner means that person that cosigns your loan will be responsible for the loan payments and the loan amount if for some reason you are unable to pay your payments. Look towards parents, friends, and other relatives as potential cosigners if you know that they can qualify for a larger loan amount than you can. Before you do this though, make sure that all parties are on the same page and understand all the terms of the loan agreement, which includes who is going to be responsible for the monthly payments on the loan. Getting a cosigner should be one of the last resorts as it can lead to problems with friends and family if you were to become unable to make your payments for the loan.
In conclusion, if you can’t get a small business loan from your bank give me a call and we will help you get the loan you want and need.
7. Get A Sunovis Loan
Mr. Samuel indicated that business owners should contact him to find information by industry or business type on various loan products available to small business programs for expanding, modernizing, improving and maintaining small businesses and much more.
Here are some ways, he suggested, that you can possibly get that business loan after being denied. Different tactics will work in different circumstances.
Bernard Samuel and his organization offers a broad range of products to meet your different business funding needs. His financing solutions fall into three main categories:
- Cash Flow Cushion: Fulfill your working capital needs due to seasonality, delayed projects, unexpected costs, or delayed revenue. Our micro-loans are often the ideal solution for short-term bridge financing.
- Expansion: Additions of equipment or infrastructure can be vital to increase revenues and reduce costs. Sunovis offers a variety of lease or purchase options, including SBA loan funding.
- Growth: As your business grows, your outstanding receivables and inventory purchases can put pressure on your cash flow. Sunovis offers lending solutions to help finance your business’ development.
- Working Capital: It’s a well known fact that the majority of small businesses struggle to secure the financing they need for growth Learn more….
- Merchant Cash Advance : Are you in need of quick capital to run and grow your business, but have been struggling with bad credit? Have you Learn more….
- Equipment Financing: Need to quickly make a large equipment purchase to run or expand your small business? Unless you have great credit, Learn more….
- Invoice Factoring: If your business manages customer invoices, handling extended customer billing cycles with slow to pay and non payin Learn more….
- SBA Loans: In the wake of the credit crunch and the Recession that followed it, the U.S. Small Business Administration’s role Learn more….
- Purchase Order Financing : Did your business suddenly land a big order, but you don’t have the capital needed to fulfill it? Even if you have Learn more….
If you have been denied a small business loan by your bank call Mr. Samuel and apply now! Please tell him I sent you and ask him how he can help you. His contact information is: Bernard Samuel: Phone: 415.506.7517 Cell: 408-968-0785 Web: www.sunovisfinancial.comFax: 415.520.1460
If there is any way I can help you please let me know.
The Business Doctor
Profit Builders Inc