Why is my business loan application taking so long to get approved?
Have you ever experienced a situation where a loan request takes way too long? Why does that happen? You’ve met with the bank and made the request. Now what? Here is how it should go.
The bank asks for information to support the loan request.
You provide it.
The bank completes their due diligence and submits the application.
The application is quickly approved with terms and conditions as agreed between you and the bank.
You are kept up to date at key milestones; application submitted, application approved (with or without any changes), the date credit agreement outlining terms and conditions of financing will be provided.
Sounds pretty straight-forward, and it can be that simple. Unfortunately, for the majority of businesses, it rarely happens like this. Why? For me, I have seen it boil down to two things.
The bank representative is lacking the expertise or experience to know if the bank will approve the request, and what exact information the bank will need to support the request. Sometimes this is compounded by bank staff turnover, where you have bank staff who do not know you, or understand your business and the local industry.
The information requested by the bank can not be provided or is provided but is inaccurate or very late. Assuming the information requested is reasonable, the inability to quickly provide accurate information can become a credibility issue for management.
How do you overcome these issues? Its easy. Make certain that your request to the bank has all the pertinent information THEY NEED to support the request AND the bank understands why you are requesting this loan. Do they understand and support your story and loan request? What benefits will the company experience with this new loan? How does this new loan impact the company operations and financial position? Can you demonstrate the ability to repay the loan? How does the loan impact leverage, liquidity and cash flow?
Can you explain all this and provide supporting documentation? What security will the bank what for the loan, and what new terms and conditions should be expected for loan funding and ongoing administration? This can all be incorporated into your loan request to the bank.
The trick is to provide all relative information to the bank so it is easy for them to complete the loan application, but this can be a daunting task. The good news is I can help.
Let’s talk! DM me or visit darrenkjemhus.com
