You need financing for your company and want to make an appointment with your bank. Perhaps you are still quite new to the market as a founder and have developed a clever business idea for which you see a need. Maybe your business has been established for a long time and you want to make your company fit for the future and expand.
Of course, the financial situation of a founder is often not quite comparable to that of an established company. Nevertheless, as a founder and entrepreneur you can make a number of similar mistakes in the credit interview, which in the worst case can lead to the rejection of the loan application.
So what should you pay attention to when you are considering an appointment with your bank?
1. You do not seek credit comparisons with your bank
In times of online banking it is in principle no problem for companies to conduct their banking transactions via the Internet and to compare offers in detail. This is very convenient because you have a high degree of transparency about all costs and services. You can make your statements online at Bank A, your securities account is also digitally managed at Provider B, and your transfers are carried out with a convenient app. Despite this high level of digitisation, many entrepreneurs fail to obtain offers for loans from several banks.
Many smaller businesses and the self-employed still feel they are regular customers of your bank or online bank. This could be your downfall in a financing application. Read this article on how to build credit in the US.
Every bank likes it when you bundle all your business with it, but very few banks reward you with a cheap loan offer. Compare the prices on the market and do not rely on a stable business relationship with personal contact to your house bank. This makes it easier when a loan is due.
2. You take too much time with the credit
This is a cardinal error that you should absolutely avoid. If you wait until the last minute to apply for a loan, you will have to hold the conversation under great pressure. You do not have the opportunity to compare offers. You also have no alternative if your advisor refuses the loan. So you put yourself and your bank under unnecessary pressure. It is much better to take care of financing in good time and give your advisor a few days to check and process the loan. This shows that you are acting responsibly and that you are aware of the implications of your decision. In this way you leave a much better impression with your advisor than with a hectic and spontaneous appearance without any preparation.
3. You regard your consultant as an enemy
Keep in mind that it is an easy exercise for any consultant to reject your loan application. If you expect to negotiate with an opponent before you make contact, you have already lost. Assume that the consultant is your partner. He may be in charge of approving your loan application, but basically he has no reason to harm you. After all, it is the job of an online bank to grant loans in order to earn money. So you don’t have to feel like a petitioner. Just assume that your advisor will grant a loan if your concept is convincing – because that’s his job.
4. You are badly prepared
Error number 4 is also a cardinal error, which can unfortunately be observed far too often. Imagine you have made an appointment with your bank. Your consultant will ask you a few questions about your company’s key figures and your capital requirements. This is to provide an initial assessment of the creditworthiness of your company. This is absolutely normal behaviour, but what happens if you don’t have these figures at hand? You give the impression that you are poorly prepared.
You leave the impression that you are not thinking carefully about your business and that you are living into the day when it comes to financial issues. Once this impression has been gained, it is difficult to take countermeasures here. It is much better if you take enough time to prepare for the interview and present yourself and your ideas with confidence. You then radiate this sovereignty and thereby increase your chance of obtaining approval for your financing. But what is part of a good preparation in detail?
5. Presentation and business plan are faulty
In the credit discussion you must present your project in more detail. You must present your project with its key data. You will probably use a classic presentation and a business plan as a means of doing this. You should definitely be well thought out and contain valid and comprehensible figures, data and facts. It is not important that you go on an advertising tour with a colourful presentation.
Rather, it is about clarifying all relevant data on your project and your company at a glance. You can learn how to prepare a good presentation in a logical and stringent way and how to communicate content in an understandable way. You can also learn how to create a business plan.
It is the basis for the development of your company or for the expansion of your business. If you are unsure which data should be included in the two documents, inform yourself in advance. You may want to have a layperson read through your drafting to ensure that your wording is understandable and comprehensible.
6. You do not accept any help
For the creation of business plan and presentation you can very well call on help. Perhaps you have an employee who is perfectly familiar with a presentation program. Let him show you how to build content step by step and present it logically. You can go through your business plan well with your tax consultant. He may ask you one or two more questions. Orientate yourself on this and incorporate his suggestions. In this way you avoid typical mistakes in advance, which a layman likes to make. Take the feedback from the readers as a starting point for optimising your work a little before you submit it to the bank.
7. Your company is financially weak
One of the biggest mistakes in credit talks is undoubtedly when your company is not yet financially established. If you are just entering the market as a founder, you must of course make this clear in the bank interview.
Then your financing needs should be kept within manageable limits. No company receives a loan of several million if no securities can be provided. So if you have hardly any equity or if you have very high liabilities without corresponding assets, a loan approval will be very difficult. So only take out a loan if your company has a solid economic foundation.
Alternatively, you should keep your need for credit low. Keep in mind that any financing must be repaid and that the bank will look closely at your financial figures to assess the risk of default. Your chances of success, on the other hand, will increase if your financing needs are in proportion to your equity.
8. Your personal creditworthiness is not sufficient
Very closely associated with error number 7 is error number 8, which plays a role especially for founders, because here the personal creditworthiness is carefully checked. In order to obtain a loan, your creditworthiness should be impeccable. Check your credit entries online and make sure that there are no negative entries. You may also be able to prove that you have already earned your first income from your company. Then the chances of obtaining a loan will increase considerably.
9. You appear arrogant in the conversation
Your personal appearance in the conversation is of great importance. Note that you must sell your project to your bank advisor.
He doesn’t know it yet, he’s hardly informed about the background, and maybe he doesn’t know your company as well. That is why you have to give him a comprehensive impression of your project during the interview. To do this, present the business plan and the presentation.
But your greatest success factor is your appearance. Make an effort to present yourself confidently and sympathetically. Stay calm and answer questions in detail without going into too much detail. Take care not to feel attacked in the conversation, but see the consultant’s suggestions as valuable content to further optimize your project.
10. You forget the necessary documents
Imagine you have successfully completed the conversation with your consultant. He is convinced of your project and promises to check your request. In addition he would like to have some information from you. If you now forget to submit the requested documents, he must believe that you have no interest in your financing. You should therefore submit the requested documents as soon as possible.