Often times, a business person will simply go through the process of trying to obtain funding by way of a business loan. They submit all the required documents and sign on paperwork that have been requested and instructed by a business banker. This is what you can expect because most business persons are the very best in what they do. However, they have little experience in acquiring funding from lenders of business loans.
Applying for a loan for your business is not be as straight forward as applying for a credit card. This is especially so if the loan is unsecured. So if you only provide information and documents that your banker has requested, sometimes your application can be rejected when you feel that there is no reason for it to be so. The business is growing healthily and bigger projects are coming in. Hence you require more working capital to grow your company even more. Why would any lender reject your application?
Always attempt to get a business loan approved at your first application. Because once it has been declined by the bank, your declined application may be used as a reference when you try to apply for it again in future.
There are material information that can be absolutely vital to the approval of a small business loan. This is especially so if the lender considers your application as one that is a border line case. An inexperienced banker may not even know of these information that can materially affect the final outcome of your loan application.
A business analyst may decline your loan simply because he or she did not know that there were additional information that you were not asked to provide.
One of these information that you may want to look into if you are trying to secure funding for your business is tenancy agreements. This is not referring to the rental agreement that you have with your landlord. This is referring to the agreements that you have signed with your tenants.
When you have a commercial mortgage that you are currently repaying, an analyst will have to take that into account when working out whether your business has a high debt servicing ratio. As mortgage payments are a significant form of financial commitment to your company, it eats up the cash flow of the business - cash that will be used to repay your business loan. This will increase your debt servicing ratio.
But in the event that you are renting out partial space of your office property to tenants with tenancy agreements to back up your claims, the sum that you are collecting in rental can possibly be written off against your company's monthly financial commitments.
So when you have a proper tenant, make sure you document that properly using your company letterhead with proper authorised signatories. You never know when you need to apply for a business loan. And this little document can come in handy especially if you application is a border line case.
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