You need financing to expand your business or to start a new business — so why has your bank declined your loan request?
The primary reasons may be:
- Your business lost money or was marginally profitable last year.
- Your business financials do not show you can repay your proposed new loan.
- Your revenue and or profit projections are outside of your industry norm.
- Your industry is deemed too risky i.e. home construction, transportation or military supplier.
- Your new business plan is strong on technical information but weak on financials and justification.
- Concentration of revenue with 1 to 3 customers providing 50% or more of your revenue.
Working with our Group we will quickly determine the probable root cause for your loan rejection. If your rejection was due to weak financials we may be able to help you explain your weakness and how you will realistically overcome that so that you can repay your loan.
We help you show how your business has or can reduce the risk of a loan loss if they make you the loan. One method is to request a loan that is partially guaranteed by the US Small Business Administration. SBA loan guaranties vary from 50% to 85% and loan amounts may be up to $5-million – $14-million on real estate. The SBA guaranty reduces the lender’s risk and often is the difference between getting your financing or not. The skill is “knowing which loan program works for you and how to demonstrate your lower risk”.
Your financial plan is critical to the lender approving your loan. If your financial plan does not approximate that of a typical business in your industry (too aggressive or conservative) you will be rejected. Lenders compare your financial plan to similar businesses: years in business, revenues, and expenses.
We buy financial information that is specific to your industry that is compiled by a trusted commercial source based on the stage of your business; start-up, 3-5 years, 5-10 years, or mature. By knowing where your company’s financials approximate your industry we can explain to lenders why your risk is manageable and your opportunity is excellent.
We review our Client’s financial plans and make suggestions to improve their plan. Often entrepreneurs do not understand or appreciate the significance of financial statements. Our process is “educational” aiding our Client to visualize the relationship among revenues, expenses, profits, and cash flows. Our clients respond with confidence and knowledge to lenders financial questions.