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When business owners are applying for financing for their business says virtual accountant. They should learn how to be specific as possible. The reason why, is so that they can end up with the financing that they require.
One mistake that entrepreneurs tend to mate. Is that they ask the bank for the amount of financing they need. But they don’t get the financing that they’re looking for, because they get the wrong type of financing.
Therefore, when business owners submit their business plan to financial institutions. When they are applying for financing. They needs to learn how to be very specific. And indicates that specificity in their executive summary.
Executive summary is the most important section of their business plan. It is at the front, and it provides a brief synopsis. Of all of the most important aspects of the business plan. Entrepreneurs should put all of their specific Financial requests. In this section So that’s their Banks know exactly what kind of financing they are looking for.
The reason they need to be so specific says virtual accountant. Is because business owners needs to understand that’s there are several different Financial products. My specifying not just the amount they need. But what amount for each product. Can help increase their chances of getting approval.
the first of the four different Financial products. That business owners will be able to apply for. Is the mortgage. Virtual accountant says many entrepreneurs assume mortgages are only for Residential Properties. And this is not true
And mortgages are for any property or building. Therefore, if an entrepreneur is buying a building for their business. Or if they are purchasing land and constructing a building. These will all count towards mortgages. A business owner should be very specific on exactly what they’re doing with the mortgage money. So that the banks can be prepared to loan them that exact amount.
The second products that business owners should be aware of our credit cards. Virtual accountant says entrepreneurs should be applying for their credit cards at the same time as the rest of their financing. The reason why, is because if entrepreneurs apply later on after they have received other financing. Because their debt servicing is already so high. They may be rejected
However, entrepreneurs need to be very mindful about the amount that they puts their credit limit ass. Because the higher the credit limit. The lower the other amounts of financing they will be able to get.
The third product is a Term Loan. And these are for assets or leaseholder Improvement says virtual accountant. And since an entrepreneur is more likely to be purchasing multiple assets. They need to specify what assets they are purchasing. And how much each asset is going to cost them. The reason why, is because there might be different terms associated with each asset.
And finally, there is a line of credit. Hampton says entrepreneurs typically will not get lines of credit. Simply because Banks prefer loaning based on hard assets. However, it is the most beneficial for entrepreneurs. Typically, because they allow entrepreneurs to only make interest payments. Which is more financially doable.
When business owners are able to get very specific with their financial needs. They will have an increased chance of getting the financing that will help them grow their business.
Business owners needs to understand that how their business plan is worded says virtual accountant. Can actually impact their ability to get financing. And while entrepreneurs should have a business plan in their business anyway. If they don’t prior to applying, they should create one. And if they already have one. They should look at the executive summary to ensure your it is going to give them the best chances of getting approved.
Executive summary is the most important part of the business plan. Mostly because financial institutions are only going to look at the executive summary. When they make their decision about whether to loan money to a business or not.
Therefore, it’s very important that business owners get extremely specific with their executive summary. And not only put in their specific Financial requests. But also put in the most important aspect of their business plan. So that it can give the bank a lot of reassurance. That business owners will be able to pay that money back. Because they have such a great growth plan.
business owners needed to specify exactly how much money they are looking for says virtual accountant. But also what they need to specify, is how much for each type of product. Whether it is a mortgage, term assets, or line of credit.
However, they need to specify as well, exactly how much money they want for each product. And exactly what they are going to buy with it. This is partly so that the banks can have as much information as they need. But also, because different products might have different terms.
For example, the land might have a different mortgage than the construction of the building. A vehicle asset might have different terms than a leasehold Improvement. My understanding these differences. Can help ensure that business owners are being as specific as necessary to get the financing approved.
Business owners might also want to think about putting in the terms that they are looking for. Virtual accountant says they may not get the terms that they are looking for. But if they don’t put them in. There’s no way the bank is going to be able to give them the terms they want. If they are so inclined to do so.
Also, business owners won’t be spending a lot of time putting the terms into their executive summary. And if they are not granted the terms they are looking for. Then it wasn’t a lot of extra work. As Wayne Gretzky has said in the past, you miss 100% of the shots you don’t take.
Also when it comes to interest rates says virtual accountant. Wow business owners will 10 for the lowest that they can get. Which is typically prime plus 1%. He needs to understand that it is not the absolute most important thing to consider.
For example, amortization can impact a business a lot more significantly then interest rate. A business owner should look for the longest amortization. Simply because that will mean they have the longest amount to pay off the loan. And the payments will be the lowest amounts that they can pay back.
For entrepreneurs, they typically are very tight on money. So a long amortization is often more important than a low-interest-rate. Business owners who go with a slightly higher interest rates by 1% but are getting a much longer amortization will benefit their business in the long run.
