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Dennis Thorgesen
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Building your brand; borrowing to expand

Published on 5/21/2013
For additional information  Click Here

Building your brand is never complete. Your brand can last several lifetimes. At some point many business want to borrow money to expand. If you are here is what you should have prepared first. Dunn and Bradstreet Creating an account at Dunn and Bradstreet (D&B) is one of the first things you should do as a business. This is your business credit rating and something which can prove very important even if you never apply for a loan. It is not free to join and even joining helps your business credit rating. Prove your creditworthiness With D&B you can submit any recurring bills. The more you are able to submit the better your rating with them is going to be. Being a member helps in that when people check you out they can see that you pay your company bills. Your personal creditworthiness Get copies of your credit score from all three. Read them and understand because you can bet the bank will ask questions even if your score is 850. If your personal score is too low this can hurt your chances of getting a bank loan. This doesn't mean you can’t get a loan; it does for the most part mean you will have to find a source outside a bank. Are you earning? This is something you are going to have to prove to get a loan. It doesn't matter what source you are trying to use. They want to see income. For start-ups they want to understand how you plan on earning. Take a current financial statement with you. Not having one ready is one reason a lot of loans are turned down. Why do you need money? What is the loan going to do to increase your income? Do you know of someone else doing the same thing and having it work for them? If you don’t have something in writing explaining why you need the loan your chances of getting turned down are real high. Are you planning major changes? If so chances are you need to look for funding from a source other than your local bank. They don’t like changes even if those changes will increase your earnings. They believe businesses should be like employees and remain specialized in their main way of earning. Equity and collateral If you are not willing to put up some of your own money chances are a bank isn’t going to put their money in either. Banks don’t like risks and if you’re not willing to take some as well has put something up for collateral why should they give you a loan. Business plan I personally would never walk into a bank to ask for a business loan without a business plan in hand. Chances of getting a loan without a well written plan showing where the money you are borrowing is going to be spent is a waste of their time. Banks want to know what you plan on doing with the money you borrow. They also want to see as part of the plan how you intend to pay them back. Lock in your rate Loan rates change daily. Even if rates are currently going down it is in your best interest to lock your rate. This is something banks like to see. If you can avoid a variable rate make sure you do. Interest rates go both down and UP. Bring your magnifying glass Why? Because you want to read the fine print on the loan documents you sign. Read them and understand them. The banker may be sitting twiddling his thumbs waiting, don’t let this bother you. Remember he is sitting across from you and had better be willing to answer any questions you might have. It is a legally binding document so KNOW what you are signing. Something which works Build a relationship with your bank when you first start your business. Send them your quarterly reports, be they good or bad. If they are bad put an addendum on stating in why in your own words. This way you will have a relationship with your bankers when and if the need arises for a loan. If this doesn't work If you are turned down or believe you might be remember there is a whole world full of banks and other lenders/investors. If you feel a bank in a certain geographic location would be better suited contact them also. You will find you have a time limit to get a loan once you apply for the first. It only causes minor problems with your credit score if you get your loan started within this limit. If you go beyond the limit it will affect both your personal and business credit. The best bet is to have several banks and other lending sources lined up in case you hear the word no one wants to hear. Following the above guidelines won’t guarantee anything. If you do follow them you will have the best chance of success. For those who just can’t get loans there are other options. © May 20, 2013 2:50 PM CDT Dennis Thorgesen for Lisech eMarketing, All rights reserved.
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