Business Financing: Increasing One's Chances of Obtaining a Bank Loan
Applying for a loan in a bank or any financial institution with lending capabilities can be frustrating, especially if the applicant does not know exactly what they are supposed to do to win the loan officer's confidence. Banks have an obligation to protect the funds and assets that clients have entrusted to them; as such, they often are very conservative. At the same time, they also are in business, out to make profit by recouping the principal of loans that they extend to borrowers, obtaining a profitable rate of return on the same, and ensuring that borrowers prosper and increase their deposits with them. In the final analysis, this only shows that it is the borrower's responsibility, therefore, to develop and maintain positive relations with the bank, and provide sufficient reason for the bank to feel safe entrusting their capital to them. This text is, in basic terms, a guide to business owners as to what exactly needs to be done to get bankers to tick. It outlines the various factors that bankers consider before approving or rejecting a loan application, and the fundamental measures that borrowers could take to get their loan applications approved.
Factors Considered During a Loan Application
Regardless of the type of loan being applied for, bankers will often consider the following four factors in determining whether or not to give approval:
Credit History: loan officers will often review a borrower's personal credit history as well as that of their business (if it is not a start-up) to determine their degree of creditworthiness (Abraham & Zhang, 2008). For a business that has been in existence, lenders will often consider a business creditworthy if it has at least five trade experiences. Towards this end, business persons who have been running their business with personal assets alone and no credit could boost the chances of their entities being considered creditworthy by making a number of trade credit purchases before making their loan application. The applicant's personal credit history can be obtained from consumer credit reporting agencies; it is an outward representation of an individual's character in terms...
Loans Envisioned Research Methodology Association Loans: Association Loans Envisioned Research Methodology Association Loans: Envisioned Research Methodology Envisioned research Methodology and Design Methodologies Considered Quantitative Methods Correlation Experimental Study Qualitative Methods Descriptive Research Methods Interviewing Focus Group Mixed Method Research Designs Considered Convergent Design Explanatory Sequential Design Exploratory Sequential Design The Embedded Design Research Validity and Reliability Strengths and weaknesses Method of Data Collection Primary Data Collection Secondary Data Collection Justifying Choice and Alternative methods/designs Conclusion Bibliography Introduction: The loan associations work on different grounds as compared with commercial bank loans. The commercial and saving bank loans
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