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We all have been in that cash-strapped position where you feel you needed funding like yesterday. But your local bank takes ages to approve a loan and when it does it gives you an inadequate amount. But worry no more, today we will delve deep into the ways you can make your bank give you a loan faster.
Provide comprehensive documentation - Before approaching a bank, make sure you have all the required documents for the loan you are applying for. Banks usually have a list of requirements which you can get from your bank's relationship officer. Banks usually request the KYC documents (know your customer) which entails your identification card, your tax compliance certificate and a small passport-size photo for verification. In case you are seeking a business loan, it is advisable to have a business registration and trade license at arm's length. This will prove that you are an entrepreneur worth their salt and the bank will have an easy time approving your loan request.
Improve your credit score and creditworthiness - Banks thoroughly scrutinize your credit history and score. They want to know how timely you pay your bills, how regularly you receive money and how you spend it. So, make sure all of your bills are well taken care of, your debts are paid and most importantly there is money flowing into your account. Banks are usually guided by strict guidelines when lending and the key thing they look at is capacity. They say that cash is king. This will instil confidence in your bank that you will be able to repay the loan amount.
Enhance your character - They say character builds a man. Banks know this all too well. As such, they usually liaise with other organizations to get details of your historical loan requests and repayment records. Thus, it is prudent that before you approach your bank for a loan, check your CRB records and make sure that it is as white as snow. Otherwise, the bank will make assumptions about your character which may affect your loan application process.
Offer collateral to the bank - Banks are in the business of lending and they want to keep making a profit and be able to mitigate their risks as much as possible. Offering collateral such as motor vehicles, real estate or valuable assets greatly reduces the bank's exposure. In case of a default, they will be covered by the security you offered as collateral.
Have a clear and defined purpose for the usage of the loan - Banks want to lend to someone who is likely to properly utilise and repay their loan. A well-defined purpose and usage of the loan will enhance your credit score and also increase your chances of a higher loan amount. You need to show the bank that the money given to you will be used properly to generate income or fulfil your needs.
Use your charm - Approach that bank with a wide smile and negotiate your way up like a professional. Ask for better loan terms, a bigger amount and longer loan tenure. Banks are governed by people and they will definitely not resist a person who is friendly and easy to converse with.
Tell your business story - If you are starting a business, have key information and statistics about your business at your fingertips e.g. expenses, income, etc.. Astonish them with your prowess and mastery of business and they will have no choice but to approve your loan. And if you plan and articulate yourself correctly, they might even think of making you their next branch manager. Am kidding, but what am not is, you will definitely make an impression.
Get the help of a financial advisor - Even adventures need a guide sometimes. Find someone who understands money matters and that way, you will be halfway into your riches. Financial advisors understand the lending landscape inside and out and they can make getting a loan easier.
You can opt to get a guarantor for your loan or a co-signer - Look for a friend with a good financial profile and ask them to act in good faith and guarantee that loan in case you default. Now the bank's risk is greatly reduced and not only will they approve that big loan faster but also name you the customer of the month.
By Godfrey Githongo, WYLDE International.