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E-Myth – “Why most small businesses don’t work & what to do about it”

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Outsourced CFO | Ready To Learn How To Qualify for A Business Loans?

Outsourced CFO | how to qualify for business loans

50% of all businesses are out of business within five years, 29% of these failed businesses say running out of cash is the reason their business failed says outsourced CFO. In order to help businesses beat the odds, helping business owners understand how to qualify for a loan, as well as the difference between good debt and bad debt is important for business owners to learn. Business owners should approach the idea of getting a loan with several questions to fully understand their needs as well as what is the best loan for them to get.

Business owners who are brand-new and business need to understand the difference between financing operating capital and hard assets. Itís much easier for a business to qualify for a loan in the beginning stages of setting up their business, rather than later on in the lifetime of their business. The reason for this is most businesses have the potential to have a cash crunch as they operate. Because of this, outsourced CFO recommends if business owners need to purchase hard assets, that they do that first. As business owners operate their business, they tend to run out of cash so maximizing the cash that they do have early on a life of their business is key. Itís also much easier to qualify for loans on hard assets over operating capital. Because of this business owners will want to obtain financing for hard assets as early on in the business as possible.

Business owners may also want to find out if they are approved for 100% financing for their purchases. Especially if it is for hard assets, business owners may want to find the instances where they can get 100% financing to maximize the value of those loans. Because hundred percent financing usually exists only for hard assets, and businesses have a greater chance of getting approved for loans early on in the business process, this will be something that branding business owners will want to look at sooner rather than later.

When business owners are considering taking a business loan they also need to understand when they need that money to come in, so that they can apply for their loan early enough. The reason for this is banks can take upwards of 60 days to approve business loans, and if business owners donít apply for the loan soon enough it may be too late. In addition to taking 60 days, banks may require additional information in order to proceed with the loan, which depending on what information the banks made can take significant additional time. Formal appraisals of business and environmental assets are some of the information that banks require and can take 30 days or more. Business owners need to be prepared to wait 2 to 3 months in order to get their loan approved advises outsourced CFO.

By understanding the business loan process, new business owners can make better decisions about their business financing, and take control of the situation earlier on. This should help more businesses eliminate running out of cash in their business and increase the chances of success.

Outsourced CFO | how to qualify for business loans

Business owners who have failed ñ 29 percent of them, are often in the dark about why their business ran out of money says outsourced CFO. By helping business owners understand not only the difference between good debt and bad debt, but also understanding the business loan process, can help increase the chances of success for entrepreneurs. There are several things business owners should take into consideration when thinking about financing.

Entrepreneurs will want to shop around for the right bank. The reason for this is because every bank may have different qualifications for granting loans. As a business owner may not know which are the best banks to approach, therefore, approaching more than one lending institution at a time is key to increase the odds of the business owner getting their loan approved says outsourced CFO. A great bank will help business owners qualify their loan by helping them make adjustments to their application in order to satisfy the bankís requirements. Because of this, a great banker will be an amazing problem solver for the business owner. Business owners also should know that banks may require additional information such as environmental assessments. Asking for additional information is the banks way of satisfying all of their conditions reminds the CFO.

In addition to having a good banker who is a great problem solver, entrepreneurs need to also understand that there will be loan underwriters at each bank, and how that may affect the loan. Loan underwriters are work for the bank to ensure that the loan makes financial sense for the bank. Business owners will not have contact with an underwriter, and often the bankers themselves donít have contact with them either. This is to ensure that the bank is getting an unbiased opinion. If an underwriter denies a loan, there is nothing a banker can do to change that decision from a Outsourced CFO!

For these great reasons, most business owners will want to approach more than one bank at a time for financing. The last thing that a business owner needs is to go through the entire process, be denied and have to start all over at a new bank. Itís completely reasonable to approach multiple banks because what may not suit one bank, may suit another. Until you put in your applications at different banks itís hard to know which banks will fund which businesses.

Understanding the loan process at the bank level can help business owners make better decisions about their loans. Including when to apply, how soon they should apply, and what to expect during the process. By understanding the process better, business owners can make better informed decisions for their business and increase their odds of success greatly. This information should help business owners qualify for the loan and get the money he needs in a timely manner that they need it.