Bank Requirements For A Business Loan
Applying for a bank business loan is tough and sometimes stressful for first-time entrepreneurs. Banks are very picky when it comes to lending someone a loan to start a business. You may get the bank's approval, maybe not. Much depends on how you introduce the business you have in mind and the qualifications you present that meet their requirements.
Importance of a Business Model/Plan to get a Business Loan
The most important factor that a financial institution considers the approval of a bank business loan is the business model/plan you present them. Because a business model serves as your company's resume, it has to have the fundamental components like financial analysis, a sound goal and definition. Your business plan is the first thing a bank examines. A careful strategic planning and creating is important before you approach your prospective financier.
Three C's to Close a Business Loan Deal
The three C's a borrower should take into consideration when applying for a bank business loan are:
- Character - This covers an applicant's criminal records like credit history, home ownership, and family ties.
- Collateral - A substantial list of collateral a borrower has to serve as the loan's guarantee. It also includes cash in hand, record of funds borrowed and business equity.
- Cash flow - Encompasses the comprehensive record of financial statements.