It’s the weekend here and I just want to stray away from the normal loan application form surveys and case studies, which takes up allot of time – believe me. We’ve been noticing that small business people who fill out application forms in order to get our advice and help tend to provide very little information, and that is OK, but we can’t really give any solid advice on a particular loan application unless it has some good information. Such as;

• how long you have been in business?
• it the small business a start up?
• what is your business model?
• what is your credit rating – what is your FICO score?
• what is the REALISTIC amount of money you need to borrow? (lenders would rather lend MORE to make sure you succeed)
• have you completely disclosed all of your personal and business financial information? (if you are not 100% transparent then the whole exercise of applying for small business capital is mute)
• a detailed description of your past business experience, including all of the businesses you have owned, and/or worked in for the market experience required to convince lenders to approve your loan

These are just some of the areas where the application form surveys are “light” in content. I understand the most small business owners are short on time and in a hurry. We understand that you may feel desperate for a loan, but this is no time to be in a rush. This is the time to line up all your assets, short comings, market advantages, collateral, co-signers, cash on hand.

Don’t Weaken Your Application for Approval

Another piece of advice we have for small business owners (or soon-to-be-small-business-owners), is to NEVER cheapen or weaken your application. Don’t go off on a tangent telling the loan officer of all your mistakes, regrets, hard times, financial desperation, divorces, medical bills, gambling habits (believe it or not we had a small business operator go in to great lengths about their gambling addictions and how they need were struggling to pay off their debt!), and plain old “bad breaks”. Lenders don’t want to hear sob stories – they want to hear the cold hard facts on your financial situation, and most of all how much security you can provide on your capital loan.

Banks, bankers, loan officers, and central loan application centers are looking for home equity for security first, and after that, they are looking for security in form of new equipment. They will accept security in the form of your business property if you own it and have equity in it, and of course they will accept your home equity (as mentioned above).

Lenders don’t care about how hard you are trying to clean up your bad credit rating either. Lending institutions are in the business of making money – pure and simple. Don’t think for a second that trying to add a personal plea to your application will help you in any way – it will hurt you. Banks want to see a confident, organized, truthful applicant who has proved the recent consumer credit history and business credit history is solid. They will forgive past mistakes if they see responsible behavior from you in the last year (YES, many lenders will give you nod if you have only “had your $hit together” for 12 months – I know, because I am a small business owner, and I claimed personal bankruptcy at one time).

So keep your conversations limited to the task at hand – you giving the bank the most detailed and straight forward account of your financial situation, including cash flow, market reach, and recent business profits. They want to know see how healthy your business is, and they want to know how healthy your personal finances are.

Nowadays the banks just run your application through their processing databases, using Fair Isaac scores and the three major Credit Bureaus (TransUnion, Equifax, and Experian). You are just wasting your breath getting into your life story. They will approve you or decline you based on math – not how much you beg them.

The truth is that YOU ALREADY KNOW what your financial situation is, and you already know whether or not you will be approved or declined. Save your time and the lender’s time by first being honest with your gut instinct, and the go about cleaning up your act one day at a time. There are many thing you can do to clean up your credit rating, and change the course of personal and business finances. Applying for more credit when you are not ready will hurt your credit rating.

Hope this didn’t seem to harsh, and hope this helps you on your way to eventually being approved for the loan you need to start a new business, or bolster an existing business.