Applying for equipment financing or a working capital loan shouldn’t be like going on a blind date where you only tell the other person the best things about yourself and leave out the lesser parts. stellar. The analogy to the application process should be more like running for public office where whatever is hidden in those closets comes out. It makes sense to put your cards on the table, because late discovery of a tax lien or default, even if it was many years ago, can crush your chances of approval. It may also decrease your chances of working with that financial agent again.
To save your time and your lender’s time, disclose anything negative early in your application for business financing. Include explanations with details of these events where possible; a medical issue or the departure of a key client can be valid reasons for a financial downturn in your business and can sometimes be overcome by obtaining approval. If you have documentation; letters, statements, etc. to back up your explanations, it will increase your chances of making a clear case for the negative things that happened. At least it will show effort and reinforce the “character” part of your application that many applicants underestimate. Remember, this is a people business and perception adds yet another factor to the equation.
In cases where the negatives are so significant that they cannot be resolved, it is best to find out as soon as possible to save you time and effort so that plan “B” can be initiated. There is always a “B” plan… which includes using high risk lenders who specialize in approving customers with mild to severe credit problems. If an offer from a higher risk lender is not acceptable, you always have the option of refusing it without any expense on your part other than time and effort.
In business, as in most other aspects of life, the goal is to achieve a positive result quickly and efficiently. The sooner you know if your equipment acquisition or expansion can be approved, the sooner you can move on to other strategies for business success. We know the problem for many companies is going through the paperwork process which for the most part cannot be avoided, but if you share any issues you’ve had in the past, many financial officers can preview your profile. without asking for credit or requiring a full review. financial package before having a good idea if you can be approved or not. That way, if you have to go through the paper shuffling, you’ll know it’s headed for likely approval.
By Lester Salvatierra
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