Steps to negotiating better loan terms

Written By Steps To Faculty Published August 13th, 2010

Getting a loan these days is tough. But many business owners need a cash injection in their operations to stay afloat. Despite the difficulties of securing a loan or even being able to convince a lender to give you a loan, you can still obtain funding by using some well though out strategies. Take a look.

Step 1 Gather information about the type of loan you want

Research the types of financial institutions that offer the type of loan you are interested in and their lending rate. To assist you in this endeavor, acquire this vital information at bankrate.com and can talk with the staff of lending companies. These professionals will help assess your need and the repayment options.

Step 2 Complete the required application

Give the lender the required document for assessment. This will assist the lender’s assessment of your financial position and that of your business. This will also assist them give you options of repayment option given the fact that you cannot repay the loan due to the cash flow problems. Often times, not only will tax information be requested, but also your employment history and all financial statements and sales projections since the inception of your firm. At this stage, request that you be given a lower rate if possible and a longer time frame for repayment. YOu can of course wish to pay of your loan sooner, but in the event that your cash flow runs dry and business is slow, you do not want to be stuck missing a payment. This will be bad for your credit.

Step 3 Wait for an approval

The lending officers will check the credit worthiness of your business. Be sure to provide an explanation of any discrepency if a problem should arise. Also, be prepared to explain negative marks on your credit. To assist you increase your chance of securing a loan, state the fact that your business has cash flow problem and offer to give the lender your account receivables as collateral. Explain in detail why your are short of cash.

Step 4 Provide other disclosures about the business that may enhance your chances of getting a loan

This may include past cash flow statements showing how the business has been paying its debts. Be friendly to the lenders to your ending officers and provide the required information that will assist them assess your viability to secure a loan that you have applied for. Establish a good relationship with the identified lending institution as this can be your future business financier.

Step 5 Have a business plan

More importantly, include a detailed business plan explaining the nature of the business how it doing compared to other related businesses in the industry. A business plan is needed in order to allow the lender understand the nature of the business you are operating. The business plan also shows all the financial sources of the business and how the business has always been paying it debts. The information is necessary for the lending institution has it uses it to determine the credit worthiness of your business.

Remember to develop a plan to repay the loan that you received. Please visit stepsto.com for more great business advice.


Roger Due

Investing in Your Destiny® & Coaching Program - Wealth Building Summit Dallas, Texas

My name is Roger Due and I am from Albuquerque, New Mexico and I am the owner of the Monsano software company. This has been an absolutely fantastic conference. This is the best I have ever been to.