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Outsourced CFO | should you get a business loan
Some of the problems business owners face today is either they canít qualify for a loan or they canít get the loan as quickly as they need, or they canít pay the loan once they get it says outsourced CFO. By helping business owners understand the loan process, they can help business owners decide if that the debt they are incurring is good debt or bad debt, as well as help them increase their chance that they will get the loan they need.
Qualifying for a loan is not based on luck says outsourced CFO, entrepreneurs will want to find a bank that is willing to work with them. Not all banks have the same risk tolerance when it comes to loans. A great banker will tell you if your loan needs to change terms in order to qualify. Once they let you know what you need to adjust in your application, bankers can help ensure deals can close. Having a banker that is willing to work with you is very important to successful loan applications.
In addition to great bankers, knowing the information to include can help loan applications get processed quickly. Often banks will require additional information such as formal appraisals and environmental assessments. By having these documents sooner in the loan process rather than later can help increase the amount of time that loans take close. Since many of these reports take upwards of 30 days, being able to save that time from the beginning increases the odds of the loan being approved sooner says outsourced CFO. Most business owners will agree that a 70 day loan is much better than getting approved in 120 days.
Business owners often think that getting a business loan is a similar process to getting a personal loan. This is not at all true. The number of business loans that are approved in 30 days is very few and far between. A more realistic timeline for loans to close is 60 days. And if additional information is required partly through the process, that can add on 30 days minimum to the timeline. The business owner is not aware of this length of time, it may cause them to apply for the loan much later than they need.
Another huge mistake that entrepreneurs make when obtaining loans is thinking a smaller loan is better, and that a smaller loan is a smaller risk and easier to pay back. Something that business owners should take into consideration is that financing hundred percent of assets, can help them free up money for operating capital, which will help them succeed in the future says outsourced CFO. Having operating capital at their disposal can help businesses avoid cash crunch later on.
By understanding the loan process, but it takes to qualify for a loan as well as what type of loan they should get, business owners can set themselves up for success and ensure that loaning money is a good investment in their business.
Outsourced CFO | should you get a business loan
50% of all businesses are out of business in five years says outsourced CFO. And 29% of those businesses have said that running out of cash was the reason they failed. Helping business owners understand finances and loans will help them make better decisions for the future and help increase the odds of their success. When it comes to loans business owners have a hard time qualifying for a loan, and if they can get the loan they canít get it fast enough or they canít pay the loan once they get it. By understanding the loan process business owners can decide whether or not to proceed with the loan, and if they do the best way to go about doing it. Here are some things that business owners need to know when considering business loans.
Some business owners are scared of debt, thinking that all that is bad debt, and end up thinking that leasing is a better alternative to getting a loan. While leasing can be a good secondary choice says outsourced CFO, the best bet is to obtain hundred percent financing if possible. If not possible, leasing can be a good option, but business owners need to be careful with leases to ensure that the lease rates baseline are the lease rates that are advertised. Sometimes lease rates can increase unexpectedly or leasing companies can add a financing charge which ends up being a less favourable option to financing. As long as business owners understand the difference, they can make the best decision for their business.
Business owners should apply for financing as early on in their business as possible recommends outsourced CFO. The reason for this is itís easier to finance on initial purchase than afterwards. Business owners should ask themselves is their cash crunch potential in their business. Most businesses out there has a cash crunch potential. Therefore purchasing hard assets should be done first. As businesses operate, they tend to run out of cash. Therefore maximizing the cash earlier on in the business becomes important, because qualifying for loans later on is harder.
Another helpful hints to maximizing successive getting approved for a loan, is knowing that business owners should be pursuing more than one lender simultaneously. The reason for this is due to the length of time it takes to close a business loan. It takes 60 days for a business loan to be decided, and even longer if the bank has asked for more information. In order to ensure that a business owner gets the loan when they need it, applying for loans at multiple banks will assure them that even if one bank declines their application, they have another application that is still underway. If a business owner only approaches one bank at a time, if that application is denied and they have to start that sixty-day process at the beginning says outsourced CFO.
Maximizing the probability of success will help business owners qualify for their loans, and get the loans when they need the money.
