TIPS TO GIVE YOUR BUSINESS LOAN APPLICATION SOME VOOMA
Do you realise that it takes money to borrow money which means your business credit score, the business’ current assets and the ability of the individual guarantors to repay the loan will be considered. Approval is more likely if you show that you have personally invested capital in the business to the tune of 25 to 50 percent of the loan amount requested.
So within your business loan application communicate a clear business plan to the prospective lender. After perusing your business plan, your financial institution should have a good understanding of what your business does, how it will make money and how revenue will be used to grow the business and repay the loan over time. It is advisable to include projected details of how the loan funds will be used.
The cash flow of your business is an important factor in determining your ability to repay the without liquidating collateral. Accurate, up-to-date financial statements will clearly show how money flows into and out of your business.
Strong character references in the form of your work history and letters of recommendation will be required and these should include a description of your know-how and expertise that will give the lender the necessary confidence in your ability to make the business a success and repay the loan. Financial and character references provide a background of healthy borrowing and personal experience to give credibility to your application.
Obviously, there is always risk involved with lending and borrowing money. The bank knows that even with all your expertise and personal investment, your business might still fail. Provide them with a reasonable plan for repaying the loan should the worst happen including how you would liquidate the assets and the value of collateral.
Go over every detail and be certain you are providing as much useful information as possible because a clearly defined business plan will show the lender how your business will use the business loan to make money and repay the loan. Finally, include a plan for the worst to assure the lender you’ve already thought of every possible outcome.
Browsing Posts published by Gillie
MORE PEOPLE RENTING IN THE PRESENT CLIMATE
Although interest rates have remained unchanged, more property owners are reportedly selling due to financial pressure and opting to rent instead. According to the FNB Property Barometer Rental and Buy-to-let survey for the second quarter of 2011 – 51 percent of sellers moved into the rental market while 49 percent buy cheaper properties after selling.
FNB Home Loans property strategist John Loos says on the supply side of the rental market, the survey pointed to a relatively weak buy-to-let demand. “In the second quarter of 2011, the percentage of buyers buying to let remained unchanged from the previous quarter at a low of 8 percent. “This is slightly up from the low point reached in late 2010 of 7 percent and remains poor compared to the boom years where the percentage was up around 25 percent,” said Loos.
Of these sellers, 26 percent were high net worth individuals owning properties with an average price of R2.58
million, 24 percent upper income owners with properties averaging R1.8million, 21 percent middle income with
properties valued at R1.21 million and low income property owners with houses valued at R599 000.
For those down-scaling to cheaper properties, it was not clear in which price bracket they were buying into. In
Port Elizabeth, 10 percent of people are selling their homes and opting to rent instead. Dave Summerton,
director for the Eastern Cape and owner of Harcourts Summerton said further statistics reveal that between 10
percent and 15 percent of homeowners are selling their properties and ultimately down-scaling their investment.
“This can be attributed to the fact that the increase in electricity, rates and many other consumer items has left
those who were already financially stretched unable to maintain existing bond repayments,” said Summerton. He added that their portfolio includes properties valued between R800 000 and R2 million. In Port Elizabeth, the average selling price of houses is R800 000.
