Everyone that’s been in business has been where you are now. You need a loan, but you’re afraid of being rejected. Or, maybe you think you have nothing to fear. Before you get too self-assured or too scared, here are 8 very real things that could kill your business before it takes flight.
- Past Failures
If you have any past failures in business, a business loan may be a no-go. Lenders don’t like failure. Failure means you either didn’t repay the loan or there was significant collection action that had to be taken to get you to repay. Don’t have any of that on your credit report. And, if it’s there, work to reclaim your good name before you apply.
- No Money
No money? You have problems. You can’t get something like salon financing, even from reputable lenders like BCBL, without having some kind of down payment or money in the bank to assure the lender you can repay the loan.
- No Plans For Future Growth
Business plans are a must. If you don’t have one, make one. Know how you will repay the lender, how you will make sales, what happens if you can’t make sales and repay the lender, and what your plans are for future growth. Lenders know that plans don’t always pan out, but you should have a plan, backed by reasonable and realistic facts and expectations.
- Not Being Realistic
Be realistic about your future growth. Most businesses do not grow by 500 percent a year. Even if you think you have a killer idea, don’t pitch a 500 percent growth trend to your lender unless you want a rejection letter.
- Having No Leadership or Organization
If you don’t have good leadership, why would a lender want to give you money? Banks want to know that you’re not a first-timer with no experience who will blow the bank’s money and leave them high and dry.
- Being Too Demanding With Loan Terms
When you’re hungry for money, you don’t want to look desperate. Unfortunately, a lot of startups think this means they have to be demanding. Wrong. Listen to what the lender has to say, do some gentle negotiation, see where the lender might be flexible, but realize that usually what the lender says, goes.
- Not Having Confidence In Your Company
Do you not have confidence in yourself? Then, don’t talk to a lender. Nothing will get you booted faster than stammering and stuttering. If you believe in what you’re doing, you should have no problem walking into a loan officer’s office and sitting down like you own the place.
- Not Building Rapport With Your Lender
At the end of the day, a lender is a human being. If you can’t build rapport with them, then your business will never get the funding from the bank. Shake hands with your loan officer, have something witty to say, and explain in simple and direct language:
- Whether you’re able to repay the loan
- Whether you will repay the loan
- What you’ll do if you can’t repay the loan