Reasons why you should do your research before you apply for business loans

2. Your business loan "to do list" is incomplete.

You must have everything in your business and/or your business plan setup exactly the way traditional lenders require in order to obtain a business loan. Traditional lenders have a checklist of about 20 to 25 items which you must comply with before they will even consider processing your application for a business loan.

A well written business plan is your first step in your preparation for a business loan. A very detailed business plan will give the lender an overall picture of your business. It is an absolute "must" that your business plan explains in detail, your business goals, your sales projections, a forecast of your future earnings for the next few years, your marketing strategy, and other related information about the past, present and future elements of your business.

If a lender or investor have to constantly contact you for more information related to your loan request then the chances of them approving your loan goes down dramatically. You only have one chance to make a great first impression.

3. Your selection of various types of lenders or investors was poor.

Regardless of the fact that there are numerous alternative sources and creative ways to obtain money for a business, most people still feel more comfortable rushing to their local bank or credit union to obtain a business loan, first, without shopping around.

Venture Capital groups, small banks, business cash advances, hard money for businesses, private investors, commercial loan brokers, credit unions and other alternative sources are all worth investigating.

If you are a well-established small business owner, then you should consider what the Small Business Administration can do for your business through one of their small business loan programs.

4. You are unable to verify positive revenue or positive cash-flow or a credit rating of your business over the past three years.

You can not avoid it. It will happen. Loan officers will begin the initial screening of your business loan application by asking you "We will need to see at least three previous years of tax returns" and "Can you show me financial records of your business."

If you are a new business owner then most likely your business has not been in existence long enough to provide 3 previous years of financial records and tax returns. Unfortunately, this is one of the number one reasons why new business owners usually GET DECLINED for business loans by traditional lenders.

5. Your business plan and/or business proposals has missing info.

Your business plan and/or business proposals should give a thorough description of your business, your product and/or service, your market, your marketing plans, your cash-flow projections, your customers and your competition.

According to the SBA your business plan should outline your corporate strategy for the next three to five years; it will aid you and the lender in determining whether the business will generate the cash flow needed to repay the loan. If you don’t have a well-planned and very detailed business proposal then you are probably not going to qualify for business financing from a traditional lender.

Wouldn't it be so much easier to hire a professional to help you prepare your business plan for you.

6. Your business loan request or business ideas may be too unique or too unusual for a traditional or commercial lender to offer you a typical commercial or business loan.

According to the SBA reason number one for business loan rejections is that the lender does not make loans for the type of business involved. In a typical example, fewer commercial banks are offering financing for bar and restaurant properties. In a similar fashion, an auto service business is often given expensive and unnecessary environmental stipulations.

There are many special purpose commercial properties such as campgrounds, churches, funeral homes and gas stations that most traditional lenders have eliminated from their commercial lending program.

For most lenders, extending credit to an entrepreneur usually means customizing the loan to suit the financing needs of an industry that is similar to your business. You must make sure that your lender or private investor specializes in business financing for your particular industry.

7. Your business credit rating or previous credit issues.

Before a lender will take the risk of extending credit to your business, your lender will take the necessary steps to inquire about your ability to repay a business loan. To help determine your ability to repay a loan, many loan officers will order a copy of your business credit report from a credit-reporting agency such as Dun & Bradstreet.

In frequent situations where the business loan applicant must submit a personal guarantee to secure a loan, a lender will review your personal credit history and FICO score from the 3 major credit bureaus.

Your personal credit and your business credit should always be separate from each other in order to protect your personal assets. Of course, some business owners may feel compelled to "do what you gotta do" to qualify for the loan.

Find out how mixing personal assets or mixing personal guarantees with your business is a sure-fire way to ruin your personal finances.

8. Low confidence level .

Most business owners at some point in time realize the difficulties associated with loan applications and approvals for individuals and businesses in general but you must never allow this to ruin your confidence level.

If you expect your potential lender or investor to take a risk on giving you a business loan then he or she must feel confident that you know what you are doing. Remember the wise words "if you don't believe in yourself then how do you expect someone else to believe in you?"

Having a low confidence level during the loan interview process with a loan officer will most certainly lead to your loan application being DECLINED!

9. You were unprepared to answer the TOUGH questions.

Why do you need the money? Why should we take the risk of giving you the money? What is the exact amount of money that you need? How do you plan to repay it? If your business runs into cash flow problems, will you still be able to repay the loan?.

Not only should you be prepared to answer the TOUGH questions but you should also be willing to disclose your answers to any of these TOUGH QUESTION even before that particular QUESTION IS ASKED OF YOU.

For example, the risk-factors of your business, the cash-flow issues and the marketing plans that is associated with your business may be a topic that your lender or investor WILL NOT discuss with you but these issues are important to your lender or investor.

If your lender or investor does not get your positive input about these issues or any of these TOUGH QUESTIONS then he or she will assume that you don't have a clue about these vital aspects of a business.

10. You forgot to submit and discuss your repayment ability or repayment plan to pay back the loan to the lender.

It is so amazing to hear traditional lenders and private investors talk about business loan applicants who don't even have the slightest idea of how or when they intend to repay the loan that they're asking the loan officer to extend to them. According to the Small Business Administration a repayment ability from the cash flow of the business is a primary consideration in a loan decision.......

11. Lender or investor having doubts about your business-savvy such as your record-keeping and your business management skills.

Did you show up at the loan interview with wrinkled or folded paperwork falling out of the notebook. Did you take 5 or 10 minutes trying to find the requested documents to present to your lender or investor. Did you have to return back to your automobile or back to your home or business in order to retrieve some important documents requested by your lender or investor.

Whether or not you will be approved of any type of business loan is based on any or all of these top 13 reasons.

One of the most important reasons will be how you present yourself and your business.

First impressions means everything. You may only get one shot at impressing a particular lender or private investor.

12. Errors inside your loan application.

You must always present yourself as being a business owner whose very sharp, competent and very professional and detail orientated.

If you can't prove to your lender that you know how to fill out the loan application correctly, then how on earth will your lender have enough confidence to make a positive decision about you being a suitable prospect for business financing.

Minor errors inside your loan application may not seem like a big deal to you but always keep in mind that getting approval for a business loan might require every single thing to fall into place, perfectly!

13. Lack of documentation to support any statements that you have made to a lender or investor.

At any time during the process of applying for a business loan, your lender might ask you to provide documentation to verify any financial claims that you have made about yourself or your business. Depending upon the purpose of your loan and the structure of your business, your potential lender may request these documents from you during the front-end or the back-end of your loan interview or any time during the processing of your loan application. You must never make any statements or any claims to your potential lender or investor for which you can not verify with documentation or paperwork.

Epiphany Business Solutions Consultant Group know what banks and other major lenders look for whenever they deciding to approve or deny your loan applications. We know what you need to do to get approved. Having decades of experience in knowing the lending criteria associated with each significant type of lending institution, gives Epiphany the advantage. We know which particular lender or investor to send our clients to.

Contact us and ask usabout our corporate credit building plans and business credit assistance. We offer special business loan assistance plans for the self-employed.

Find how how we can help all types of self-employed business owners get APPROVED for any type of business credit.