1. Definition of loans that are linked to different purposes
Every time you ask for a loan, the first thing the lender will ask you will be related to the use of money. What are you using money? Is this for what they call treasury goals or for capital expenses? In very simple terms is for routine everyday business needs, which can be in the form of cash requirements to pay daily fees such as paying suppliers, buying stationery, paying to the cashier, etc. Or is this because you need money to expand or grow your business, which in this case can buy a new machine, improve your production process. One last possibility is to have a little money for contingency which means if you need to make a big payment to replace the new engine that just broke down. One of your lenders is clear about how you will use your money, then one box is checked on the score card or he is a step closer to the decision-making procedure.
b. Loan criteria
Obviously there is not only one type of business loan financing. It all depends on the different criteria for lenders will consider before he can decide whether or not, he wants to give you the money. Let’s go through two main:
1. Number of loans: Make sure the number looks sense when compared to your capital and your balance sheet size. You don’t want to ask for $ 10k if your capital reaches $ 1k. Why? You can wonder why not all. What is the difference? Well there is a big difference. The bank will lend you to extend it, you can refund money very easily. So, if you ask for more than you can do in terms of making the type of income or having a smaller capital than you requested, a large red warning signal will ring for them. So start small and then you can increase gradually when you have proven that you are a good creditor and you make enough money to pay back. Remember this is always worried by banks!: Can my client pay me back? You are now beginning to understand what the main components are in the process of financing business loan decisions. Remember that once you know everything, you have a magic key to decide what is the best business financial solution for you and get your business loan quickly.
2. Maturity: This is the second most important information that will be calculated by the bank when they make a decision in any business loan financing transaction. Loan maturity means how long you want to take a loan. A good average is 5 years. If you take a large amount of money and want to pay faster, you have to show that you have enough cash backup after all costs are taken, to pay for your loan. On the other hand, if you go more than 5 years, the bank will want to get a picture where your business will stand after that period. And if you are a small-medium-sized company that has been operating 2-3 years, this can represent the risk for the bank to give you a loan for a long time because you don’t have enough history to support it. So, even if you have desperate needs to get financial assistance for business growth, remember that you want to increase your probability to get your loan approved by asking a bank for loans that will fulfill their loan guide.
c. Take action now
Now you know what the bank is looking for and where lender loans guidelines, most banks will base their decisions, you have increased your level of success because it has a loan you agree to whatever business financial solutions you choose. Go and get your business loan quickly!