Access Loans From Your Banks With Ease, See How To Build Strong Credit Worthiness As Business
Building Strong Credit Worthiness, Basic Loan Advice For Businesses
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Introductions
Getting loan from your banks shouldn’t be a difficult thing for businesses. It could be the case of inability of business in building Strong Credit Worthiness with their banks. How do you u build credit worthiness as a business?
Having a bank account is not enough to guarantee that your bank will give the business the loan it’s requesting for. You might have an active bank account you keep depositing monies in but that is still not a guarantee. Doing these alone do not build strong credit worthiness with your bank.
Before your bank approves of any loan amount for your business, the ability to pay back and to continue dealing with them is a major thing considered. This article is going to take you and your business through simple ways you can build strong credit worthiness. This will allow you to access loans with no or less stress from your banks.
Scenarios
Before we enter into the conversation of building Strong Credit Worthiness as a business, let’s go through these scenarios. Try and make a judgment for yourself if you were in the shoes of the banks, would you approve or disapprove of the loans.
Scenario A
Mr Asam Enterprise opens a business account with a bank, deposits daily sales made from activities into his the account after paying all his creditors. He does so every day without any failure.
Scenario B
Mr Oti Enterprise opens a business account with the same bank, deposits daily sales into his bank account. He issues all his creditors with cheques to receive payments from the bank. Aside the deposit he makes daily, his bank account keeps operating even in odd hours. This is because all payments and receipts are made through the bank.
Now make a judgment for yourself. Which of these two businesses looks good in the face of the bank? Exactly, scenario B with Mr Oti stands out. This is because money keeps going into and coming out of the bank account. Unlike Mr Asam who keeps making pile of monies in his bank account. His is account is more or less inactive and when the two appear before the bank for loans, Mr Oti Enterprise will be served quickly than Me Asam Enterprise.
Why Your Business Is Not Credit Worthy
This article will teach you how to build such credit worthiness as a business. This will make you access loans from the banks with easiness. Don’t get freaked out when your bank turns you down when you approach them for credits. Let’s build strong credit worthiness. Read the lines below
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Reasons why businesses get rejected by banks when contracting loans
This reason is simple; your business is not worthy enough. This paints a picture of not being able to service the loan amount. Why is your bank not credit worthy despite getting making huge sales daily.
- Your bank account is more or less inactive though you keep depositing your daily sales into it.
- Your payments and receipts are made outside your bank. What do I mean? You receive monies from your debtors by cash and on your premises. Also payments made to creditors are done through the same means. You may be proud of your business for being able to deposit some amount into your bank account daily, but this is still not enough.
These are the reasons why most banks ask you to save with them for six months before being able to access loans from them. They are looking forward to know the pattern of your bank transactions. This will tell them whether your business is credit worthy or not. That is whether it stands so good to service loans.
How to build strong credit worthiness as a business
What should I do to build strong credit worthiness as business with my banks and to easily access loans from them? See the following lines;
- Create a business account instead of a personal account with your bank if you are looking forward to access loans with ease. Why creating business account? This tells the bank you have been able to distinguish the activities of your business from that of personal activities. There are some individuals who operate personal accounts and puts business monies made from business transactions into it. The fact is your business will always look credit unworthiness in the face of the bank.
Why so? The common fact is that, you can take monies from your personal account and there will be no promise of returns into the account. If it is a business account and monies are withdrawn and make no returns into account, the bank believes probably you have invested such into other activities which will cough out funds at the end of the day.
- Make all payments and receipts through the bank. No at any point in time receives or pays monies outside your bank if there is the mean to do so. This will make your account stands out. Always funds running through the account makes it active. With this, you build strong credit worthiness with your banks and the business can access loans with ease.
- If you target to acquire loans from a particular bank, first open an account with the bank. Don’t go there with the intention of acquiring loans and then you will be told to transact with them for six months. Open the account and makes it active for some few months and apply, you will be sorted within no time.
Conclusion
Basically, those are some simple ways a business can use to build credit worthiness with their banks and to be able to ease.
Before transacting with a bank make sure to visit the said bank and inquire more about their operations and the services they offer. This will let you know if the banks also can be trusted with your money.
You can as well consult a financial expert if you notice the services of a bank you intend to transact with to be too sweet to believe.
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