Commercial banks don’t offer every business the same rate or the same level of financial security, nor does every bank offer every single commercial borrower the same amount when requesting business loans in Fort St. John. Due to the fact that a startup doesn’t have as much leverage or assets to put down as a well developed, long standing major company, a bank is more likely to offer a small startup a little bit less. And, most commercial banks will charge these borrowers a little more, as well. No matter what your situation is as a commercial borrower, understanding banks, how they work, and determining your loan approval amount, and interest rates, are just a few of the many factors you will want to weed through prior to deciding which lender to go through for your commercial loan.
What banks look at –
When applying for business loans in Fort St. John, no two businesses are exactly alike. One needs money to open a new location, another needs money to purchase inventory, while a third business needs money to buy new pricey equipment. Lenders want to know what you are doing with the money, first and foremost, and how you are going to use it to develop the business.
In addition to this, banks and lenders will:
– Want to know what financial and physical assets you own, in the event they offer a secured loan.
– What you can afford to repay each month, after business expenditures.
– Whether you are financially stable, have had any defaults, issues with previous lenders, or money problems with business ventures in the past.
Basically, a bank wants to know who they are dealing with, how well established the business is, and whether or not the borrower might be at risk for defaulting on the loan.
What banks consider in determining rates –
In addition to the above aspects, banks will also consider your borrowing history. They will view your past expenditures, how much you want to borrow, how long you want to repay the loan, and so forth. Many commercial banks may even request that you provide them with references, or referrals, so they can find out more about you as a borrower. Think of it this way: the higher the requested amount of the loan, the more in-depth an investigation they will perform, and the more they are going to look for (in terms of credit worthiness, ability to repay, etc), before loaning you the money, and determining what interest rates they are going to charge you.
As a business owner, you might think you are guaranteed a loan, as long as you have a stable business, assets, and a steady customer base. But, this is not always the case. So, before you go in to apply for loans, make sure you know what banks look for. Additionally, make sure to find out about a few banks, so you have more points of reference, and can eventually choose the right lender for the funds required, when the time comes to apply for the business loan you need.