Bankers like to lend money when they are convinced that your use of their cash will generate more cash to you. Unless you can demonstrate that these borrowed funds will ultimately sow the seeds of additional funds in the form of company profit, don't bother your banker with a loan request. He or she will want to save the bank's money for customers who can put it to best use. And best use from a banker's point of view is always money making more money.
Pro formas use income, balance and cash flow statements to demonstrate your future financial performance. By being able to tie all these numbers together, you can build a future that shows the bank that you are in command of your business.
The bank probably has no question about your skill in making you particular product or providing your particular service. What the bankers are concerned about is your financial skills. All they know about you in this area of your life is what you show them in your loan application. By presenting a professional-looking package that answers their questions before they have a chance to ask them, you clearly demonstrate that you know what you are doing. You are speaking their language. You have told you story the best possible way. If a bank still refuses to bite, only then should you consider other sources of funding. There are many alternatives to bank financing, including personal financing, selling stock and other options. Which represents the best alternative for any business will depend on the specific circumstances of that business at the time financing is needed.
Among the options in personal financing are the owner's personal savings, taking out a personal rather than a business loan with a bank, borrowing against the cash value of life insurance, taking out a second mortgage on your home or other property you own.
1 comment:
This is what the problem most of the business people are facing. Need to know more about this in your next post. Thanks
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