You can get a bank loan because bankers want to make business loans. They like making business loans. It’s how they make money. Use the three ‘C’s to help you get a bank loan for your business. They worked for me and many other entrepreneurs. The three ‘Cs’ can work for you, too.
Comfort Bankers like to stay inside their comfort zone. They are just like most folks. If you are in the ‘Green Thing’ business, ask the banker “Have you made loans to ‘Green Thing’ companies?” When the banker says, “Yes, I love ‘Green Thing’ companies’, you know this banker is for you. A banker with no experience lending money to your type business will, most likely, be uncomfortable lending to your business. Keep looking until you find a banker who likes lending to companies like yours.
Capacity Believing you will repay the loan is all important to a banker. Just saying you’ll promise to repay usually isn’t enough. Every bad loan starts with a promise to pay. Bankers love numbers. A solid business plan, filled with data, charts and graphs, is convincing way to show you’ll be able to repay the loan. Bankers also love a viable ‘Plan B’. Have someone close to you give you a written line of credit for the same amount as the bank loan. Show the line of credit to the banker. You can find many free line of credit templates, like this, on the Internet.
Collateral There are two kinds of collateral bankers like. The first type of collateral is a tangible asset, like a car, real estate, securities and cash. The second and better form of collateral is a proven track record of loan repayments with the Banker. Create your proven track record by getting small loans and paying them back early. Get the loans and pay them back before you need one. You can even use your own cash as collateral to get your first loan. There is no better collateral than a borrower with a proven track record of loan repayments. Bankers like making loans to borrowers with strong repayment histories. You can help make it easier for your banker to make you a loan. Use the three ‘Cs’ to help. They worked for me and many other entrepreneurs. The three ‘Cs’ can work for you, too.