When you decide to seek the financial assistance necessary to survive in today’s economic climate, you may find yourself against a wall. It could seem to the entrepreneur that the lender or investor is requiring every document under the sun. There are so many required documents: the Personal Financial Statement, Profit and Loss sheet, Balance Sheet, Cash Flow statement, Business Plan, and much more. There is the first round of paperwork, then the second round, and maybe even a third round of documents requested.
The question the business owner must now ask is this, “Is this enough to get the loan?” When they opt for a traditional bank loan, the bank’s first priority is a credit analysis. Once you pass this analysis, all other applicable documentation must be presented before the lender will make a final decision.
Here is probably the most important question to ask. Think long and hard before you answer. Before you ask yourself the question below, close your eyes; think on your current financial position, both business and personal. In your mind’s eyes, cover all the areas of your financial situation. Okay, if you have covered all areas, now ask yourself this question:
WOULD YOU LEND TO YOU?
Seriously consider this question before you respond to it. Be sure to answer it honestly. Now, would you lend to you? Do you fit the type and amount of financing you are seeking if you were the lender? Do you fit the character of a good borrower?
If you answered “Yes”, then you should have no problems presenting to any lender what they require. You should be able to get all or most of the money you need, if you answered this question honestly.
The sobering reality is many of you will not pass this test. You know your own situation and wanting to borrow against your current financial position is not necessarily the right thing to do. If you have a bad taste in your mouth after reading this, then you know you are not a good candidate for “Other People’s Money” (OPM).
Now that you have had the opportunity to consider this question, please keep it in mind the next time you decide to borrow. It is important to consider things from other people’s point of view. Lenders are in the business of lending. If they do not make loans, then they will be just like businesses that have had to close their doors.
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