Now you’ve decided to get a business loan. You call your bank and ask around about the process of getting one. You have also identified what you need and what your goal is for the loan. After speaking to the bank, you are now being asked for some requirements and advised to fill up an application form to be submitted for approval. Now that you are ready, what else do you need to know about getting a business loan?
Business Loan Process
Unlike any other loan, business loans take more time on verification and approvals before the funds are released. A stringent process is done by requiring documents and paperwork from the borrower. Once the loan has been approved, it is known that banks do not actually give the amount that is being requested for. Banks provide an average of 70% to 80% of the requested amount.
Once your loan has been approved, banks require that the funds are deposited in your account. If you don’t have an existing account with the bank, the bank will require to open one for you.
Reason for Rejection
Most banks will not reject your application outright but will ask for additional requirements to support the application. If the documentation you have submitted proves the credibility of your business, banks will encourage the business loan through more documentation. Banks may require supporting documents for income generated, tenure of business or even authenticity of documents submitted.
When banks determine that loans being requested is more than what they believe the business can handle, amount granted will be what the bank deems appropriate to the income of the business.
Most rejections can be attributed to too much existing debt, bad credit history of the business or the owner, or a high risk of insufficient cash flow to repay the loan.
Banks as business loan lenders welcome doing business. Proper documentation and requirements is all they need to grant the loan amount the business needs.