Applying for a Loan

Apply For Loans - Applying for a Loan

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In manufacture loan requests, entrepreneurs tend to be confident that they will meet or exceed what they reconsider conservative financial projections. They then have problem insight when they receive a less than enthusiastic response. To unblemished the picture, however, we need to look at the process from the banker's perspective.

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Apply For Loans

"What bankers view as a good loan application is at times different from what applicants think," says Ray Fincken, vice president of Hsbc Bank Usa in New York. "Applicants know the bank needs information about their enterprise to process the loan. So in the first interview they often present all the good things happening within their enterprise -- focusing generally on marketing and sales.

"However, bankers are normally more curious in assessing risk and consequently studying that the enterprise has a good core foundation. Does the enterprise have experienced management? Do these managers have assorted talents and experiences to guide the enterprise through good times and bad?"

Given confidence in the management team, the bank must look at the elements of the enterprise plan from a more objective standpoint than the entrepreneur ever can. The significant consideration is either the company's major products or services provide adequate profitability and cash flow to meet all its financial obligations, particularly payments to service the debt under consideration.

If the enterprise is a startup, the best indicators are often the norms for the enterprise in which the enterprise will be competing. Are projected margins and ratios in line with others in their industry? The bank will also look at prestige reports and tax returns on the key individuals involved in the startup.

If the enterprise has some financial and prestige history, the bank will check corporate tax returns and financial statements, personel financial statements, liens, litigation, division reports such as Dun and Bradstreet, etc. To ensure finances are in order, Ray recommends receiving your personal and enterprise prestige reports prior to seeking a loan to make sure the information is spoton before going through this process. Misinformation or old loans and liens may erroneously still be on the report. Taking care of these errors prior to applying for a loan can streamline the process.

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