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Outsourced CFO| understanding business loans
Robert Kiyosaki, who is the author of Rich dad poor dad is quoted as saying that good debt is a powerful tool, but bad debt can kill you outsourced CFO beliefs that educating business owners on the difference between good debt and bad debt can help increase their odds of success in business. Since 50% of all businesses are out of business within five years, and 29% of those failed businesses will sites that they run out of cash, helping business owners get financing when needed, and helping them get the right financing can go a long way in increasing the odds of success in their business for entrepreneurs.
Business owners will often say that they are not able to qualify for the loans that they apply for. Helping business owners understand how to increase their chances of getting approved is important. The first thing that they need to understand is banks have different rules they adhere to when theyíre deciding which loans to fund. Good bankers will inform entrepreneurs of which terms did not satisfy the bank, and what they can change in their application to increase the chances of getting approved. By working with the banker closely, entrepreneurs can find out what information is required to increase the odds of getting the loan they need. Finding a bank that can work with entrepreneurs, is but business owners need to find. They can increase their chances of finding a bank that will work with them by submitting more than one application at a time to different banks is what outsourced CFO recommends.
Submitting applications to two different banks simultaneously also helps business owners get approved for loans faster. The reason for this is because if one bank the declines the loan, the business owner is no farther behind in the application for the second bank advises outsourced CFO. If only submitting one loan application at a time, each time an entrepreneur is the client, they have to start over at the beginning. Business loans take a long time to improve, therefore submitting multiple applications at a time can save the business owner a lot of time.
Helping business owners understand that business loans do take a lot longer than personal loans will also help them apply for loans in a timely fashion. Most personal loans can take under 30 days to close, while business loans take 60 days or longer. If the bank needs clarification, or more information at any time, this timeline increases. By understanding how much time is needed, a business owner can put in their loan applications at the right time.
By understanding these finer points of business lending, entrepreneurs can increase their chance of success in obtaining a loan in a way that can help them succeed in business. Business owners donít need to be afraid of debt, they just need to know how to use good debt as a tool to help them succeed in their business.
Outsourced CFO | business lending
29% of failed businesses will say that there businesses failed because they ran out of cash says outsourced CFO. That is a high amount of entrepreneurs who were unable to get the cash they needed in order to operate their business. By understanding the loan process, business owners can make informed decisions about how to use debt as a tool that can help them in their businesses.
Business owners have said that they are unable to qualify for a loan, and if they get the loan, they donít get the money as quickly as they need. Understanding the lending process at the bank level will help business owners make better decisions when it comes to applying for loans. Most business owners have had the experience of getting approved for a personal loan, whether it has been for house or their car. And they tend to think that that is the same experience they will get with their business loan. Unfortunately thatís not the case, it can take considerably more time for business loans to get processed. Business owners should leave about 60 days in order to hear from a bank if there loan was approved or not.
Entrepreneurs can do several things to increase the chances of their loans being approved, says outsourced CFO. By working with their banker, business owners can often find out what a bank needs in order to satisfy the appetite for the loan. Knowing what adjustments to make to their loan application can help business owners be successful and get the loan they need for their business. Something to keep in mind however is understanding what a loan underwriter does, and how this limits the authority of their banker. A loan underwriter works at the bank and is tasked with looking at the facts only of your loan application. Where the banker may build a rapport with you and an entrepreneur can appeal to their emotions, a loan underwriter will not meet you, and often wonít even talk to the banker. This is to ensure that the loan underwriter is unbiased and is only looking at the facts. A loan underwriter often has the final say in whether the loan is approved or not. Banker will be unable to change their mind.
When considering different loans, this is owners should look at the amortization period of the loan. Often that is going to be more important than the interest rate says outsourced CFO. The reason for that is when considering the amortization period, entrepreneurs should consider how itís going to affect their cash flow. A very short amortization period will mean that there loans will need to be paid back in a short amount of time, and it doesnít matter how low the interest rate is, a short period of time to pay back the loan often is hard for entrepreneurs. Even a higher interest rate may not be devastating if it has a very long amortization period on the loan. Being able to take a long time to pay the loan back can free up entrepreneurs cash early on the business when it makes the most difference.
