Applying for Bank Loan? Here’s How to Shorten the Process

Business owners generally have two concerns when trying to get a bank loan or line of credit. Either they can’t qualify or they face scrutiny beyond belief.

Wouldn’t it be great to save time and shorten the process?

You can if you know what banks want and if you treat a banker like you would a prospective customer – by qualifying the banker by asking three key questions.

ID-10089370Before exploring this topic, here are three miscellaneous thoughts:

— Firstly, it’s worth noting I don’t recommend trying to borrow money for marketing or ongoing operations. And don’t borrow against your credit cards or mortgage. You’re asking for trouble, especially if you’re a young business.

— Secondly, avoid alternate sources of funding unless you’re guaranteed a very low interest rate. Crowdfunding is popular but remember you’d give away autonomy. A traditional bank loan is best for your credit reputation, and will enhance your future credit worthiness.

— Thirdly, never open an e-mail from an alleged lender offering you a loan. Those are “phishing” scams in attempts to get your vital financial information.

Generally, to qualify for a loan you must be able to provide positive answers to 10 questions:

1. Consistent cash flow

You must be able to show you have a solid revenue stream and stable cash flow. That generally means operating a credible business and showing a successful three-year track record.

2. Sufficient collateral

It’s possible to get a loan or line of credit without collateral, if can you show a pattern of success and own a home. But for many entrepreneurs, banks want collateral to loan money.

3. Debt-to-income ratio

If you’ve got debt or have other outstanding loans, banks won’t come through with a loan. Multiple requests for loans from other sources on your credit report is a red flag to banks.

A bank is a place that will lend you money if you can prove that you don’t need it.

-Bob Hope

4. Customer base

You should have a diverse portfolio of customers. Banks look with a jaundiced eye at businesses that have a small base of customers. If you’re a tavern or entertainment business owner, you face long odds for a loan.

5. Minimal credit history

Banks, of course, have credit-score standards. You must have a reasonable history of obtaining credit and paying it off. Most often, banks require a credit score above 700.

If your credit report shows errors, know that you have options.

6. Personal guarantee

A bank will want you to guarantee in-writing that you’ll be responsible for the loan and that you’ll pay it off.

7. Insufficient time in business

Banks look for business credibility. That means showing them a significant track record laced with profits.

8. Economic conditions

If the economy is uncertain, the banker will be concerned. The banker wants you to be able to pay in a timely fashion. Therefore, you must have a stellar record of profits and low costs to reassure the banker.

9. Authoritative management

You must personally have a stellar business reputation for honest and expert management of your business. That’s why effective self-marketing matters.

10. Questionable sector prospects

If your sector or industry has well-known problems or is in a pattern of decline, you’re wasting your time in seeking a bank loan.

After you study the questions and determine you’ll qualify for a loan, you’ll still face a ton of scrutiny when you apply.

“The income tax has made more liars out of the American people than golf has.”

-Will Rogers

Got your documents ready? To shorten the process, treat a banker as you would a prospective customer by asking three key questions:

— Who makes the decision?

When you approach a banker, ask who will make the decision. Does the loan officer or branch manager make the decision or will it be a committee in another location?

The more people involved in the decision process means additional questions and often an inefficient use of your time.

— What information is required?

Normally, you’ll be asked for your personal and business information. At the minimum, the banker will request your previous years of financials and a current financial statement. They often prefer recent tax returns.

If you’re asking for a large loan, they’ll probably want a business plan. A real estate loan will necessitate a current appraisal. A delay in responding with documents will be a red flag for a banker. So respond ASAP.

— How do they want the information?

Learn what will be accepted verbally, and ask if they want either hard or digital copies.

Good luck!

From the Coach’s Corner, here’s more information:

Tips to Get the Lowest-cost Small Business Loan — Small business owners are facing unnecessary financial risks because they increasingly seek debt consolidation and loan refinancing as the result of high interest rates and onerous fees, according to a small-business lender. Here’s what to do.

Debt Consolidation Will Sink You without These 6 Tips — If you’re not careful in your debt-consolidation plan to bundle your debts for a lower interest rate and minimum payments, you might get into more financial problems. Here are six precautions.

When there’s No Cash, 8 Tips to Organically Grow Your Business — Organically growing a business is lot like organic farming. Organic farmers pay attention to the signs of nature as a planting guide. They use rich sources of organic matter to build and maintain soil fertility. If you’re like many entrepreneurs, it probably makes sense to grow organically. You might not have another choice.

You Can Creatively Manage Your Cash Flow 7 Ways — If you’re taking the pulse of your business, of course, the first thing to consider is your cash flow. If your cash flow is poor, you feel poor because you can’t pay the bills nor can you use money for what you’d like to do. Your image can also suffer with vendors or with customers, if you don’t manage your cash flow.

Management — 5 Frequent Causes of Cost Overruns and Failures — Extensive research shows how and why corporate projects result in cost overruns and failures. The academic study is entitled, ‘Yes Men’ Are Killing Corporate Projects. The research reported rampant misreporting of project statuses at all levels of the companies. The errant information is prompted from cultural predispositions to career aspirations.

“Those who are careless in trifles give a precedent for remissness in important duties.”
Plutarch – Life of Æmilius Paulus


Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Photo courtesy of imagerymajestic at

How to Manage Those Annoying Hidden Evergreen Clauses

A big frustration for businesspeople in financing and leasing business and commercial equipment comes after they fail to read the fine print in contracts.

Commonly found in financing and leasing contracts, evergreen clauses are designed to keep customers committed to an agreement beyond the original term.

To the rescue: LeaseQ,

LeaseQ provided insider tips to business owners on coping with evergreen clauses. Based in Boston, LeaseQ is one of the leading providers of business and commercial equipment leasing and financing to small and large companies.

ID-10056727 Stuart MilesEvergreen clauses basically allow the lease term to automatically renew at the end of the lease, unless one party or the other provides notice to the other of their intent not to renew – usually no less than 30 days before the end of the current term.

Typical evergreen-clause wording

Evergreen clauses may be worded any number of ways, but they do share common characteristics, namely that they keep the contract active longer, and do provide a mechanism, however nebulous, for ending the agreement.

They may also create serious hurdles to be overcome before the agreement can be nullified.

Evergreen clauses are designed to benefit the one providing the service, but can become a headache for the person receiving the service.

You see, most people simply do not review lease agreements months or years into the term. The clause sneaks up and is in effect before anyone is aware of it.

Evergreen clauses should be identified and agreed to only for very good reason, such as the locking in of a given price or rate. In most cases, they are best avoided, with simple refusal to sign unless the clause is removed. In many cases, lining it out and initialing where it was done will be enough to void the clause.

Try to negotiate elimination of the clause from the contract (see:  The 22 Dos and Don’ts for Successful Negotiations).

LeaseQ tips

If for whatever reason, it is impossible to avoid the evergreen clause, then evoking the clause is the single best method of protection.

Two of the most common include:

  1. Sometime before: This agreement shall automatically renew for another one year term, unless either party provides notice to the other of its intent to terminate this agreement not less than 30 days before the end of the then current term.
  2. Sometime within: This agreement shall automatically renew for another one-year term, unless either party provides notice to the other of its intent to terminate this agreement within 30 days of the end of the then current term.

Evoking the first example is the easiest, since it simply involves sending notice to the other party. The second is harder, since it involves creating a calendar item and sending notice of intent not to renew within the time frame.

For that matter, evergreen clauses are annoyingly prevalent everywhere — even in some antivirus provider agreements.

Good luck and read the fine print.

From the Coach’s Corner, here are additional finance tips:

4 Tips to Save on Your Professional Liability Insurance — Threats from possible business lawsuits are everywhere.

8 Strategies When Sales Drop and Costs Cut into Your Profits — If your sales are down and costs are hurting your profits, you’re not alone. The irony is you can do something about it — with these eight tips.

Cutting Costs: 9 Best Practices to Avoid Making Reactionary Decisions — It’s important not to be emotional when facing difficult decisions. To avoid making fearful — reactionary decisions — here are nine best practices.

For the Best Cash Flow, Manage Your Inventory Costs with 8 Tips — When your products aren’t selling, obviously, it hurts. Products just lurking in your warehouse are costing you money. Here are eight inventory tips.

Tips on Understanding the Mindset of IRS Auditors — More businesspeople have complained about the mean-spirited treatment at the hands of IRS agents than any other federal agency. Here’s how to communicate with them.

“My problem lies in reconciling my gross habits with my net income.”

-Errol Flynn


Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Photo courtesy of Stuart Miles at

Seattle business consultant Terry Corbell provides high-performance management services and strategies.