Bank Loans – Improve Your Chances by Knowing the Loan Process
Your heart pounds as you don your carefully chosen business attire, hands slightly shaking as they collect your papers, and the realization has finally hit you- the day has arrived. You’re going to meet your maker, or rather, the maker of loans otherwise known as your lender. The hours of meticulous work that has gone into document preparation and researching the loan process will be your armor and first line of defense in this loan battle. The question is, “Are you prepared for what will go on in the actual meeting with the lender?” After reading this article the answer will be a resounding, “Yes”.
The first thing to remember comes from one of the wisest figures in history, your mother. Be on time and dress to impress, after all first impressions are lasting and done almost immediately. Studies have shown that within three seconds of a first encounter, you have already been evaluated, categorized, and labeled. This is inescapable as it is an innate part of human behavior, so you must use this fact to your advantage. Make sure you are impeccably groomed, punctual, and watch your body language. When asked a question phrased in a negative manner, respond conversely with a positive take on that particular area. A word of wisdom…when doing this do not give them the impression of a Pollyanna without being able to support your positive claim. Be an informed Pollyanna!
Secondly, be organized. After all the work you have put into preparing the documentation for this meeting, make sure you have taken the extra time to properly organize your materials. The research you’ve done for your presentation will not be helpful, if you are so disorganized that you can’t find it at the correct moment. If a lender sees you fumbling through a mess of papers while simultaneously attempting to stutter out a sentence, chances are you are not going to make a favorable impression. Make sure you have practiced the presentation of your materials, timing it to be around 20 minutes, and utilize the wondrous thing known as an outline. It will be a wonderful tool for organizing and memorizing your key points. Keeping it to 20 minutes will also allow proper time for Q&A.
After the meeting, follow up can be key. Take a moment to jot a quick thank you letter or make a phone call. This demonstrates more than just courtesy, it shows that you are someone who follows through and keeps you at the forefront of the lender’s mind. If applicable, it could also be in your best interests to invite the lender to your business location and give a small tour. Having a visual can help create a clearer picture of you and your business to the lender.
The amount of time in reaching a decision can vary, but you can help speed things along. By making an informative presentation and creating a thorough business plan, the lender will have fewer questions unanswered. In cases where there are holes in the information, the lender will create a written list that will be sent to you for completion. This process is known as the “paper snowstorm”, which is as appealing as it sounds. The stronger your loan application package, the less likely you will have to weather such a storm.
Once you have all the information to the lender, it will now go to the approval stage. The timing of this will vary by size and nature of the loan, and also by individual lending institutions. Some may have the authority in that office, while others will need to take it to committee. Ask your lender how the loan approval process will work for your loan.
In the event that you receive the loan, congratulations are in order, so pat yourself on the back. Closing will then follow, which will usually happen between days 25 and 45, and will include the lender fulfilling the loan with a cashier’s check, draft, direct transfer, or wire. Overall, the typical length of the loan process can take up to 45-60 days.
Now that you have the loan, what do you do? You need to get back to work and be prepared for the next step in the process, which is going to include the lender keeping a keen eye on you and your business, as well as the collateral that you pledged to get the loan. This is a simple fact of loan life; it cannot be avoided at this juncture. The best steps to take are the obvious and include such things as making regularly scheduled payments, providing quarterly results, and generally keeping the lender abreast of matters involving the wellbeing of the business. Communication is going to be your best offense and defense in this situation. Luckily, you now have your loan and are on the path towards making your vision a reality!