Borrowing money is a requirement of almost business owners regardless of whether it is a start-up or an on-going business. There are several factors you should consider in creating and maintaining a lender/borrower relationship.
First, you need to create a relationship with your lender. Next, you should examine the loan request from the lender’s perspective. Finally, you should identify reasons why credit lines get in trouble.
Establishing a Relationship with a Lender
All business owners – whether their businesses are large or small, well-capitalized or operating on a shoestring ‑ should develop a working relationship with their primary lender.
However, remember that the lender’s first responsibility is the financial health and profitability of the lending institution, just as your first responsibility is to your business. You would not jeopardize your business to save the lender, so don’t expect the lender to jeopardize the lending institution to save your business.
The type of relationship should be one of an arms-length business relationship between you and the lender. Your expectation should be that the only way the relationship will continue is if the relationship is in the best interest of both parties.
There are a number of steps the borrower can take to develop a relationship with the lender.
The following are some suggestions:
Select the proper lender
Shop around to find the right lender. Lenders have certain types of loans and businesses they like to work with and other types they prefer not to fund. Find out what types of loans and customers each lender is interested in serving. Your business may be too large or too small for some lenders. The lender may not have any experience funding your type of business. Most start-up business owners need lenders who understand their unique situations.
Make a professional loan request
When applying for a loan be prepared to present all aspects of your request so the lender can make an informed and accurate decision. Business owners should put in writing what you want to do. This may involve preparing a business plan.
Apply for the loan early
Business owners should not wait until you need funds to apply for the loan. This puts pressure on the lender and increases the likelihood of loan rejection. Making a loan request well in advance of the need for funds shows the lender you have good planning skills.
Establish a credit history
Borrow funds for short periods and repay promptly to establish a track record of proper loan repayment.
Get to know your lender
Invite your lender to visit your business. Introduce the lender to your employees.
Keep your lender informed
Share your plans for the future. For a start-up venture, the new business will need to have a fully developed business plan to share with the lender. Included in this business plan must be a clear indication of how the business will be financed. The plan must show how the management team will make the business successful.
Don’t surprise your lender
If you foresee repayment problems, tell your lender right away. There may be a solution and the lender can be a helpful resource. Lenders would rather restructure loans for repayment than have to foreclose on the loan.
It is perfectly normal for successful businesses to borrow money and be in debt. Also, borrowing money to make money is not really a new idea. It may seem odd for your business to borrow money when you have already got personal savings. But you saved that money for a reason — perhaps to fund children through education or provide for your retirement. Whatever that reason is, if you tie up that cash in your business, it’s not available for the original purpose. Taking out credit for your business offers a number of benefits and can improve your chances of commercial success.
Most financial institutions and non-traditional lenders disclose their minimum requirements for lending. If you meet a lender’s minimum qualifications and want to see estimated rates and terms, you can pre-qualify for financing. But pre-qualification is not the same as putting in an application for personal loans. You may pre-qualify for a loan and yet your loan application may be rejected once you put in a formal application – and the more formal personal loan applications you put out, the more the impact is on your credit score.
This is one good reason why business owners need to work with trusted loan specialists like those at iCompareLoan. Our Loan specialists are able to not only pre-qualify you with multiple lenders and compare rates and terms, they are also able to get you the best personal loans which has costs and payments that fit into your budget.
How to Secure a Personal Loan Quickly
Are you a foreigner and searching for expat personal loans? Don’t worry because iCompareLoan loan specialists can set you up on a path that can get you the best personal loans in a quick and seamless manner.
We also can arrange the Best Home Loans in Singapore as our brokers have close links with the best lenders in town and can help you compare Singapore home loans and settle for a package that best suits your home purchase needs.
Whether you are looking for a new home loan or to refinance, our mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the loan. And the good thing is that all their services are free of charge. So it’s all worth it to secure a loan through them.
If you want to speak to our Panel of Property agents.