The most significant time to apply for a company loan is when you don’t need one immediately, as you’ve undoubtedly heard before.
Most of us, though, are not as forward-looking as Warren Buffett. If you own a small business, you may find yourself in the unpleasant position of requiring a loan urgently but not being able to obtain one despite your best efforts.
Then you may want to think about hiring a business loan broker to help you out.
The role of a business loan broker
If you’re pressed for time, confused about the loan application process, or don’t know where to start or who to approach, using the services of a business loan broker is an excellent option.
Most, if not all, business loan brokers began their careers as relationship managers before deciding to go it alone. Since they have a network of contacts, they know who to contact for different types of loans.
Depending on your current demands and limits, an experienced broker will examine your situation. With this information, the broker will search for potential lenders who may be willing to fund your loan application.
Until they find a lender willing to lend to you, the business loan broker will make an effort for you, approaching Lender A, B, C, and so on.
Additionally, the broker is paid when the bank loan you requested from him is approved by a financier, whether it’s a bank or private lender.
As a proportion of the loan amount, this fee can vary from lender to lender. You should confirm that you are OK with the charge before you hire a real estate broker.
When working with a business loan broker, you should consider the following scenarios:
1. It’s not ideal when your company’s directors have low credit scores.
Before approving a loan, banks review the personal credit histories of company directors because such records are reasonable indications of credit health.
Keep in mind that company directors with a history of late or defaulted payments, involuntary settlements, or even bankruptcy will have a considerably lower probability of being approved for financing.
2. Your company is super new
As much as you may require a loan while starting a new firm, the world (unfortunately) does not function that way.
Banks and financiers are unlikely to lend money to a brand-new business. Because you have nothing to present and no means to verify that your company is profitable, your default risk is high.
Your business should be at least six months old (ideally one year old) before you apply for a business loan. But if your business loan broker has excellent ties with banks and financiers, they may be able to assist you in making a stronger case.
3. You keep getting rejected by banks
Banks would never divulge the specifics of the criterion loan applicants must meet before their loans are authorized for security and competition reasons.
They also won’t tell you what specifically was wrong with your loan application.
A company loan broker with experience will help you provide tips for increasing your odds of getting a loan authorized during this time period.
Who knows what could happen with a little experienced guidance? Everything may work out in your favor in the end.
4. You don’t know any relationship managers
You may feel alone, cold and depressed when you apply for a loan.
Knowing a few relationship managers from different banks is usually helpful.
Consider developing a cordial relationship with them, as they may be more ready to press for your loan application approval if you do so. An alternative to relationship managers is a business loan broker if you do not know any.
5. You can’t receive your paperwork in order
To submit a loan application, you will need to compile a few documents.
Some of these include Your company’s business profile from the Accounting and Corporate Regulatory Authority; the personal credit scores of all board members from CBS; your company’s financial statements for the past two years; your company’s most recent bank statements; and your company directors’ most recent tax bills (also known as the Notice of Assessment).
It will help the bank determine the credit standing of your company’s directors, the amount of debt owed by each director and your company, as well as how well your business is doing financially. When it comes to gathering all of this paperwork, your business loan broker can assist you.
6. You don’t understand which type of loan works most suitable for your business
Loans are not all created equal, however. There are various sorts of loans besides secured and unsecured loans (which are intermediate-term loans).
For example, a line of credit or overdraft, invoice factoring, or finance for purchases is all options to explore.
The aim of the loan must be made clear. You might be wondering if it’s for your payroll or something else entirely. If you can get paid within 60 days, your firm will grow more rapidly.
A good option in this instance would be invoice factoring or invoice financing. It’s advisable to get down with your broker and figure out why you need a loan before choosing one that fits your situation.
7. You don’t know what you retain getting wrong
As a first-time applicant, it is usual to make mistakes during the loan application procedure.
When most financial institutions (FIs) do not provide the actual reason for rejection, it is difficult to identify what to fix. However, it can be incredibly discouraging if different financial institutions constantly deny you.
Instead of having to reapply with various financial institutions over and over again, work with a business loan broker.
They can help you determine what went wrong, as well as suggest who to contact next, based on the amount you’re searching for and your personal needs.
8. You don’t care about paying a small fee to get your loan approved
Money can fix every problem, according to a Chinese proverb.
It’s better to let your trusted business loan broker handle it instead of taking chances and wasting time applying to different financial institutions over and over again.
Once your loan has been accepted, all you have to do is pay them the agreed-upon charge.
Be sure to read the contract (including the fine print) thoroughly, ask lots of questions, and avoid signing anything you don’t fully understand.