If you’re a small business looking for a bank loan, you may be finding the process daunting. Bank loan software has automated much of the process of applying for and managing loans. CSS management tools, collection software, dynamic recovery services: all of these are automating banking processes that used to be done completely in person. Things have gotten technical, so here are some things you need to know to make your bank loan application go smoothly.
- Go in knowing about bank loan software. The rise of automation means that you’ll have to pass through some gates before you really start talking with the bank. Bank loan software will require loan officers to enter some minimal data points to prove eligibility and you’ll need to be ready to provide these if you even want to get started. Bank loan software also makes it pretty simple to find out everything about your financial and credit history, so it’s best to just be upfront about all that right from the get-go.
- Have a clear business plan. Most banks are going to want to see your summary of the company, the product, the market, the team you’ll use to produce it, and all your financials. This shows you’ve done your homework and know that there’s a good chance of being successful in your endeavor.
- You are going to need collateral: just accept it. When you’re the one hoping the bank loan software will pass you through to the next level, it’s easy to forget that you’d probably be really angry if your bank gave away your personal checking account money to just anyone without making sure they could get it back if things failed. That’s what’s happening when you ask for a loan. The bank is risking other people’s money on you. They’ll need to see that they can make back some of that money if you can’t make a go of things, so this means you’ll need to stack up some of your hard assets against the loan.
- Get all your financials together and have them audited. This means all your balance sheets on assets, liabilities, and capital, preferably going back about three years. If you don’t have three years of company history, that might be ok if you have good credit and plenty of collateral. While it’s not always required to have your financials audited, it’s always a good idea if you can afford it. The CPA who does the auditing is basically taking some responsibility for ensuring they are accurate, and he or she can be sued for a bad audit. This gives the bank some extra assurance that your numbers are accurate and honest.
- Have all your own personal financial details in order. You’ll almost certainly have to sign a personal guarantee on the loan, and the mantra with bank loans is “If you don’t believe in your idea, why should we?” You’ll need your social security number, net worth, details of your assets and liability, and financial statements from anyone with a significant share in your company.
In the days of bank loan software and the automated debt collection management system, it pays to be ready to go when it comes to your commercial loan. Have everything you need in advance and you’ll be a lot more likely to get the loan you need.
