Five Things Your Recent Credit History Report Can Tell Your Banker About Your Real Ability To Repay A Loan!Part Two
As you previously discovered in part one of this series, about “how” your local banker (who) in all likelihood, isn’t psychic but,still can most certainly discover a ton about your future ability and likelihood of repaying a loan request, simply by studying your recent credit history report.
That’s probably as near to having a crystal ball as they need to get! And although your local banker can’t stay in business unless they continually make sound loans! There are (at least) five more major considerations, that you should spend some quality time considering! Before you actually apply for that all important first loan.
No Matter What Your Recent Credit History Report Tells Your Banker!
(They’re Still Gonna Wanna Know How You Plan To Effectively Deal With These Five Additional Major Considerations!)
1.) Major consideration # one: Entrepreneur, hopefully you do fully realize that first and foremost your local (or any) bankers, primary consideration and fiduciary (legal) concerns and allegiance is to their depositors!
Which means, under “no” circumstances are they simply going to turn over their depositors hard earned money to an unseasoned start up with (no previous real world proven record!)
And basically watch you use their loan to get much needed real world experience! Forget about it!
2.) Major consideration # two: Has to do with the real world “probability of the successful repayment” of the loan! In other words “how” realistic is it for your local banker to conclude that they’re making a sound loan?
Given your current state of initial start up capital, previous (good or bad) business ownership experience and the overall state of the local economy and your current and future or potential major new competitors? (Especially those that may be flush with cash!)
3.) Major consideration # three: Your banker has got to feel totally comfortable with your most recent past ” payment history profile.” Because let’s face it (already), if you’ve got a past history of (either) paying your bills extremely slow or not at all! “Why” on earth would or should they take a chance on you now?
Regardless of the fact that you eventually got your act together!
4.) Major consideration # four: Promises, promises! Their next major consideration is, your scheduled “timing of the repayment. Entrepreneur, “how” soon after that money leaves their vault and lands in yours! Do you plan to start repaying this loan?
Because remember, if it turns out to be even fiercer local competition, than you or your banker originally anticipated! Or if your local economy takes an even further dip or if local, state or federal regulations, put a strangle hold on your businesses ability to grow!
The fact of the matter remains, both you and your banker are still legally liable for that loan! You must answer to the bank and the banker must ultimately answer to their depositors!
5.) Major consideration # five: Your lender will most definitely need to seriously consider (both) the current and future “cash flow” projections of the business. And decide “how” realistic they are. Given the current state of your local economy, current and anticipated future new competitors, as well as any major previously unforeseen major setbacks!
And if your personal initial equity (the original start up cash percentage), is somewhere between one and five percent, you’re talking about a lot more initial risk to the bank! And with a nagging ongoing local recession dragging on, and better capitalized competition and applicants with far more modest future cash flow projections and a far more experienced management team in place than yours!
While it’s certainly not impossible to secure a much needed business loan these days! Your recent past credit history report, goes a long way towards helping your local banker decide if you’re worth the ongoing risk! Don’t you agree?
Please list at least two simple spin off concepts (in the comments section below) that you can apply to your business, product or service in the next 30 days or less!
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