By Alan G. Whitnack, RPA
President of JOAL Consulting Inc.
Careful planning, preparation and follow through are required when making the decision to apply for a commercial loan. It is important that you consider all of these areas prior to approaching a financial institute for a loan.
Why Do You Need The Loan?
Carefully investigate the purpose of the loan as the lender will want to know why you need it.
Borrow The Proper Amount
Make sure that you request enough money to complete the planned task. While you don't want to borrow too much money (extra cost of interest) it doesn't do any good to borrow $30, 000 to buy a $50, 000 piece of equipment if you don't have other resources to make up the difference. This may sound simple but it is particularly difficult when you are providing funding for operational activities that are likely to be variable in costs.
When Do You Need The Funds?
Plan ahead so that funds are received in sufficient time required to complete that task planned .
Known Your Lender
It is always a good idea to start with a lender that you know, knows you, or knows someone else that you do who could have significant influence in their decision. Keep your options open and if possible have several choices.
Plan Your strategy
Have your request for loan prepared before you go to the lender. State the loan specifics (including amounts, interest, repayment, security and other conditions) that you are requesting this loan for. Tell them all you can about yourself, your business, your clientele, your competition, and your plans. Providing financial forecasting for two - five years can help your lender understand your business better and will also help you in evaluating their possible response.
Keep Your Options Open
Don't throw all you have to offer in the first request as they may ask for more that you don't have. Talk to your friends, family, and professionals about what to expect and keep your expectations realistic. Remember the person you are likely asking for the loan is a paid employee who is only motivated to lend money won't get them reprimanded and that they are convinced will be repaid .
Each lending situation varies and professional assistance may be required. Networking and using friends and families experiences can be useful and productive in dealing with this very stressful process. Good luck!
JOAL Consulting Inc.
Attn: Alan G. Whitnack, RPA
phone: (403) 948 - 0082
fax: (403) 948 - 9503
e-mail: [email protected]