Top Tips for Success with Bank Loan Applications

achiveing success

So you want to achieve success with your Bank loan application? Whether it is for an Investment, support for a well run business or simply some wise planning, there is always bank support for a good proposal, well presented. Here are some of the key steps that you can help you achieve success with your bank loan application:

  • Be Prepared with your written submission

Know the submission well. Ensure that all aspects are robust and backed up by solid information. Build the basics well: What is being sold? Who is being sold to? How (much) Profit is being made? What are the particular strengths and weaknesses of the business? How are the strengths being capitalised and being built upon? How are the weaknesses being minimised and reduced? Give the bank the information that they want, in the way that they want it; as set out in the formal bank loan application. Seems obvious? It is amazing how frequently it is overlooked.

 

  • Prove Competence, Commitment and Commercial Awareness

You are expected to know your own business intimately and your own submission even more so. However, make sure that you lift your head, see, and say what is happening in your industry, your business environment, among your customers and with your competition. If you lack passion and commitment about your own business, you will not convince your Banker or any other lender!

 

  • Provide Information that has been proven and approved

If you say that you are doing well, you are bragging! If the audited accounts show you are doing well, there is a reasonable basis for evidence. Provide bank information like Cash flow statements or independent information like Tax Clearance Certificates and you are already anticipating questions that you are going to be asked.

 

  • Take a Banker’s Perspective

The Banker has a job to do and that is to make profits for the bank! Put the Banker in a position where he knows this is an excellent risk for his Bank. Your presentation must convince the Bank and other Lenders that failing to accept this proposal would be a poor decision for him/her and for the Bank. That means building your credibility with every single fact and piece of information presented within the bank loan application or proposal..

 

  • Get Closest to the Decision Maker

You are unlikely to be present at a Credit Committee in the Bank where the decision to make the commitment is accepted or rejected. Equally, you need to go as far up the ladder as you can to be close to the individual that will be advocating on your behalf. Remember that this is a business proposition and not a personality competition. It is facts and supported facts with solid forecasts that will make your case. You being nice is simply a bonus and even bankers’ love bonuses.

 

  • Sensitivity Analysis, both up and down on the Proposal

When preparing and developing the Bank loan Application and Proposal, ensure that you have a ‘Most Optimistic’, ‘Most Pessimistic’ and ‘Most Realistic’ version of your proposal considered and developed. This includes explaining how you will deal with each of the eventualities and more specifically, how you have dealt with such instances in the past.

 

  • Don’t just Tell the Truth; Prove it!

What Banks do not want or need is another fairy story where everything works out terribly well and all live happily ever after. To make the best decision, the Banker must have the best information, the best facts and the best practical examples of how shortcomings, problems and setbacks expected have previously been addressed and dealt with.

 

  • Be Prepared with your Personal Presentation

Have the written preparation completed, reviewed and checked, preferably by an independent, experienced third party. Do a trial run a few times. Consider all of the questions that you expect to be asked, your responses, follow-up questions and responses and include the worst questions possible.  Keep it brief, focused and backed by facts. For me, the best trial run has always been to approach a professional Banker with a “Draft Proposal” and ask the question: What would I have to do with this proposal to get your support?

 

  • Know your friends!

If you have a colleague attending the meeting with you, know what areas each of you will cover and your agreed responses to each issue likely to arise. This meeting is not the place to disagree!

 

  • ….and then what?

What happens when you are confronted with success? When you do get the Banker’s support and approval for the Bank Loan, be clear where this is going to lead. The Bank want their profit and their money back and appreciate clarity on how and when this will happen. Knowing what happens beyond the proposal being successful is crucial. Equally, knowing what happens in the event of failure to gain support is important.

 

Follow these tips and you will have a solid proposal to make, but as always, Terms and Conditions will apply and there are no guarantees! Good luck and Good Hunting.

capturing success