Building a company is certainly not an easy thing. Many things must be prepared starting from business ideas, so the most important thing is capital. Building a company does not mean just having a brilliant idea, but equal capital must also be prepared. If you think realistically, where are there businesses that can be started and expanded without financial flows. Do you know? Many small business owners have finally given up on the idea of global change because of difficulties in the financial sector.
However, there are now a lot of financial institutions that are ready to provide funds for brilliant entrepreneurial ideas with solid business packages. But this does not mean that everyone can get funds easily. The bank will make an assessment of each submitted application. Unfortunately, many small business owners lost their loans and were turned down because of the lack of explanation he made in the application. One reason is the thought that there is a part of certain information that will not be examined by the lending officer. To avoid this, which will result in the rejection of a loan application for capital, let’s discuss some of the errors in loan applications that you should pay attention to.
Does not include updated financial records
This one mistake is common to small business owners when looking for loans in financial institutions. They do not prepare more time to work on their financial records so they can be submitted when writing a loan application. The bank itself certainly needs this information so the bank can find out whether the business is still stable or not. It also results in the decision of the Bank whether the bank will risk capital money into the business or not.
Even though you only intend to grow your business, still financial institutions must know the financial records. This will convince financial institutions whether your business can repay loans or maintain the business in the near future. In essence, every financial information must be detailed and real without being reduced or overstated.
If you intend to develop or build a business honestly, provide the right balance sheet, financial statements, and other real documents.
Not clear on the use of funds
Every borrowing of funds certainly has a reason and domain where the money will be used. The lender must also know and examine the matter sharply so that the money they lend is not misused. If you are honest if you want to use the loan money to increase production, the borrower will easily accept your application and trust your business.
Unfortunately, this error often occurs in small business owners whose ideas are still unclear and confused in allocating loaned funds. Most lenders will certainly reject the loan application. Loan money should be used as well as possible so that business income can continue to increase so that capital can be repaid.
People The bank wants the money borrowed to be used properly so that your business position can increase. The lender will look at the business needs that you run and evaluate whether the money is enough or not to improve your business.
To avoid this error, you can make points that clarify your financial realm. Explain all the benefits that you can later feel after getting a capital loan in a summary, brief, and clear so that lenders are more confident in your business.
Not Knowing Credit Rating
It turns out that not knowing your credit rating when applying for a loan can make your loan application rejected. Credit ratings can have problems that you don’t realize. Before applying for a loan, include a credit report clearly because this can describe how reliable you are when you will pay any bills and debts later. Just by looking at the numbers listed, they can find out whether you are a person who can be trusted or not.
The solution is to make sure you always check your credit report regularly, with this you can convince the Institute and make this report a stepping stone to the success of your business. The higher the level of credit you have, the greater the chance to be able to borrow funds to be approved. Not only that, loans will also run faster than lower credit ratings.
Request for Borrowing is Late
It is very important to apply for a business loan in a timely manner. Many small business owners whose offers are rejected because they choose the wrong time. The solution, you have to choose a quality time and determine the best loan institution so you don’t choose it wrongly. It also aims to avoid bad possibilities that will occur later. Allow yourself to evaluate the choices available.
Look for a lender who offers finance according to your needs. Expect it well until you find the best option based on the information you have got. That way, you will get more time to gather information for loan requests needed by the bank and the loan process can be faster.
There is no business plan
This one point is very fatal for your business. Business plans are important for mapping your goals. Describe clearly how you can run a business according to its purpose. Banks and financial institutions will certainly look at someone who has ambitious goals and a clear target market. If the business domain is clear, lenders will be easy to inject funds into the business.
Applying the Wrong Type of Loan
Before applying, make sure the type of loan chosen must suit your business needs. Match your financial needs with the right type of loan. Many small business loan applications are rejected simply because the type of loan is not suitable for their business needs. The borrower must think realistically, whether the loan can be returned or not later. The type of loan interest and the period are also different.
Change Business Structure
Changing the structure of the working day before submitting a request for exposure is a common mistake that many do. This can be considered wrong because the financial institutions will assume something is wrong in the business. Indirectly, they want to see how stable the business is. It’s best if you don’t change the type of vendor or structure you have. Explain in detail and honestly, so the lender will also easily trust your business.
Not Reading Loan Terms
Before signing a loan agreement, make sure you have read the loan terms that have been implemented. Don’t wait until the financial crisis occurs to make a loan because it can make the cash crisis worse. Choose the best time to sign a business loan. Don’t rush, ask or consult the best loan for your business. Don’t swallow all the information you get from financial institutions.
Those are some of the mistakes that you must avoid in filling out a loan application. By avoiding these mistakes, it’s likely that the application you submitted will be accepted. Make sure all important reports and documents have been verified in detail so that no more errors occur in the future.