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NOT MAKING IT CRYSTAL CLEAR EXACTLY WHAT YOUR BUSINESS DOES:...3 NOT DOING A GOOD JOB OF EXPLAINING EXACTLY WHAT THE LOAN IS FOR:...3 NOT HAVING UP-TO-DATE FINANCIAL INFORMATION:...4 NOT TAKING SOME OF THE RISK YOURSELF:...4 MAKING NOTICEABLE AND MAJOR CHANGES INVOLVING YOUR CREDIT IN THE PERIOD PRIOR TO APPLYING FOR A LOAN:...4 APPLYING AT MORE THAN ONE PLACE AT A TIME:...5 TRYING TO OBTAIN FINANCING THROUGH "TRADITIONAL" MEANS ONLY:...5 WAITING FOR A LOWER RATE:...5 NOT USING A TRUE PROFESSIONAL TO HELP YOU GET A BUSINESS LOAN...6 CONTACT INFORMATION:...6 Page 2 of 7
Believe it or not, lenders REALLY DO want to lend you money. That's their job! YOUR job is to give them good reasons for making the loan and feeling confident that they will get paid back in a timely manner. Below are the most common mistakes people make when applying for a business loan. Read each one carefully so that you understand what a lender wants so that you can maximize your chances of getting approved. Not Making It Crystal Clear Exactly What Your Business Does: This is a great starting point. Before anyone will loan you anything, they need to understand how your business generates revenue. In the 'old' days (before internet use became commonplace) it was much easier to understand a business. Business owners were medical facilities, attorneys, plumbers, roofers, factory owners, retail stores, etc. Now you have importers who sell their wares online, virtual assistant contractors who hire their virtual employees online and never see their customers or employees in person, consultants who simply consult with their clients via webinars, online e-commerce stores, etc. Whether your business is traditional or online (or a combination of the two) remember this... just because YOU understand how your business works, don't make the mistake of assuming that the lender does. Make sure that you have a written description of your business, including how it operates and how it generates revenue. Not Doing a Good Job of Explaining EXACTLY What the Loan is For: One of the most common mistakes business owners make is not being able to provide a good explanation of EXACTLY what their loan proceeds are going to be used for. This is not an area to be vague. For example, if you are going to use the proceeds to buy equipment, it may help to be PRECISE (even down to the model number of what you plan to purchase). This is not always necessary, but the more information you can give about the loan s use the better. Page 3 of 7
No matter what the purpose for the loan proceeds be as thorough as possible in describing what you will be using them for and you will decrease the anxiety level of the lender, while increasing your chances of getting your loan approved. Not Having Up-to-Date Financial Information: Here is another biggie. The more up-to-date your financials are the better chances you have to get approved. No one wants to lend money this year, based on financials from 2 years ago. If it is between tax periods, in some cases lenders will ask for quarterly financials. Another way to maximize your chances or approval is to have up-to-date info -- even when it is not required. For example, if you are applying for a loan say on March 1st of 2013 and you have not filed your 2012 taxes yet, only 2011 would be available. It may be advantageous to have the tax returns for 2012 - even though, technically, you would have until March 15 or April 15 to have the 2012 tax returns ready for a government entity. NOTE: Many loan options are available where there are NO financials required. Ask a professional at JRG Capital Group more about this. Not Taking Some of the Risk Yourself: In the case of some loans you should be willing to transfer some of the risk to yourself. Examples would include having the funds for a down payment in the case of an equipment purchase or using an asset as collateral for a loan. While not all loans require a down payment or collateral (Ask us more about this), the more risk(s) you are willing to take translates to less risk for the lender and makes the loan approval process much easier. Making Noticeable and Major Changes Involving Your Credit in the Period Prior to Applying for a Loan: It is very common for a 'novice' borrower to attempt to 'clean up' their credit by closing existing lines of credit or credit cards. Sometimes 'novice' borrowers even ask lenders to reduce the line of credit on a particular account. Page 4 of 7
DON'T make this mistake. Leave these accounts alone in the period before trying to get a loan. Let the lender tell you if you need to make any changes! If you have already made this mistake, don't worry. Just be up-front to the lender about what you have done and why. Lenders get nervous when they see other providers of credit decreasing your credit lines or closing your accounts when you are asking THEM to give you credit. Applying at More Than One Place at a Time: This is another mistake that 'novice' borrowers make. They assume that they can maximize their chances for a loan by applying at multiple places all at the SAME time. Lenders will 'see' this and get nervous, as you may seem to be 'desperate'. Again... if you have already made this mistake, don't worry. Just disclose this fact to your current lender and then stop applying for loans and WAIT for a decision. Trying to Obtain Financing Through "Traditional" Means Only: Unfortunately, many uneducated borrowers think that they can get loans only through their local bank and they are not aware of all the non-traditional ways of getting business loans. A good loan officer with a good capital lending firm (such as JRG Capital Group), is trained to recognize your needs and propose a loan that fits your situation perfectly. Creativity in the lending process is often not possible at traditional banks and lenders. Many businesses fail or simply do not get the capital they need to grow their businesses because they are unaware of the many, many options available when it comes to obtaining capital. Waiting for a Lower Rate: Once you get offered a loan or get pre-approved... DON'T WAIT. Go ahead and lock in your rate while you can. The risk you assume by waiting can far outweigh the financial benefit you will receive by obtaining the vital capital you need. Page 5 of 7
Although sudden rate increases are rare, they DO sometimes occur and some rate increases can even put a previously available loan out of your reach. Not Using a True Professional to Help You Get a Business Loan No matter what you do, be sure to get good advice from a loan professional that really IS a professional. Unlike many financial services companies, JRG Capital Group, Inc. charges NO up-front fees. While many of our competitors make alternative revenue by charging application and processing fees, JRG Capital Group does not get paid unless you get the funding that you need. We also offer prompt response times, exemplary service, and consultative guidance throughout the lending process. Plus because of our experience we understand the entire lending process and the economic situation many business owners are facing. Therefore, we specialize in offering flexible solutions that cater to your individual situation. JRG Capital Group Group, Inc. is a member of the NAELB and is licensed as a finance lender in California (License #603J413) and can operate in all 50 U.S. states. We strongly believe that both integrity and communication are important parts to the lending process and promise to provide both to our clients. If you have been denied credit by your bank or loan institution or feel that you are not getting the attention that your situation warrants, then you need to let JRG Capital Group Group, Inc. handle all your financing needs. Through various partnerships, we are able to offer our clients a national lending database of over 2,400 lenders, assuring you that we will be able to offer you the most competitive rates and terms available. Contact us now for a free consultation! Contact Information: Page 6 of 7
Corporate Headquarters JRG Capital Group, Inc. 1042 N. El Caminio Real, Ste. #B-347 Encinitas, Ca. 92024 Customer Support Telephone: (760) 652-6161 Email: info@jrgcapitalgroup.com Page 7 of 7