Factors to Consider When Getting Bank Loans for Business

There are many companies that suffer from under finance and the entrepreneurs are not able to get the loan that they need for their companies. In the last 30 years, almost 40% of entrepreneurs are now extremely worried about their company’s financial situation, and the place they resort to getting the loans is none other than the bank which becomes their only source of potential capital.

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The threshold loan limit of a bank is centered at around $200,000 and in the last few years, the amount of companies asking for this loan amount has reached to a whopping 30% and rising, where as very few companies actually found this amount to be fulfilling.

Every company that now needs a loan wants to get above $200,000 and thus make a mistake of risking their entire asset.

There are specific key loan factors that can increase the chance of getting a bank loan. The factors are account manager turnover, business experience, business banking services and company size.

Account manager turnover: For every business, there is a specific account manager who deals in all your business financial needs and hence is your first source of obtaining a loan. Unless you do not have proper cordial relations with this person, your chances of getting a loan may be very vague. Its necessary that you keep only one account manager instead of three or four as the rejection rate increases with increase in account managers.

Business Experience: Providing a loan too depends on the business experience that you or your company has. Businesses with an established track record have more chances of obtaining a bank loan, rather than new start up businesses. If you have a start up business, then there has to be some solid future, some solid investment, before the bank can provide the loan. The reason for this is that, if your business is risky, so is your chance of repaying the loan, hence for inexperienced firms the rejection rate is almost 50%.  If there is no 10 years business experience, there must be instead a profitable period of 6 months, on which the bank can consider giving you a loan.

Business banking service: In order to maximize the chances of getting a bank loan, you have to have very good business ties with the banks, meaning that you have to utilize their business services, their offerings, their deals. When you utilize their products, then they will maximize your chances of getting a loan, as it would be providing financial help to a trustworthy customer. Using the bank for all your account, credit cards, debit cards, etc will ensure that the account manager will provide you with a loan.

Company size: Just like with experienced  companies, size of the company is also another major factor to consider. When companies have an employee rate of 100 or more there is just a 2.5% rejection rate for loan. So the larger your company, the better the chances of getting a loan. Banks want to provide loans to low risk entrepreneurs, not those who have a high risk.

These are the factors that if utilized effectively could provide you with maximum chances of bank loans, and where as the decision is concerned, a regional office of a bank decides if you are eligible for a loan or no. One thing that could diminish all your prospects of getting a loan is extreme outstanding debts. The more severe credit history, the more impossible for getting a loan approval. Prove that you are able to clear off all debts, before applying for another.