6 Things The Bank Will Ask When You Need Equipment Loans
Purchasing equipment for your business can be a huge burden sometimes but it can be eased with the help of equipment loans provided by the bank. Though taking the loan from the bank is not that difficult but it’s better to know what things you will need to qualify for it. Showing up at the bank with zero knowledge and homework about it would do nothing but would put a bad image in front of others. Not all banks are the same but many focus on a few common areas while going through your loan request process. It is always a better idea to prepare narratives and projections before showing up directly at the bank. There are many things to keep in mind while applying for bank loans and to know tips about negotiating is always a great idea. If you were surfing the internet for this reason then this article has got you covered. This article will guide you through six main things the bank will ask when you need equipment loans.
Banks are open to giving loans to the startups, except the rule that the federal small business administrations have several programs that makes sure that some portion of the startup costs is separated. Due to this banks can lend the money along with the government, which will reduce the burden and risk on the bank itself too. The bank is very serious about checking the assets and the details of receivable accounts to make sure the company is legit and would be able to pay back the loan.
There are many applications that are shown up at the bank for equipment loans but your business plan has to be different than others to standout. To review your loan applications, nowadays almost every bank requires a business plan from the applicant to make sure they are lending on the right project and to the right person.
Business’s Financial Details
It is important that you show and share all the business financial details with the bank. That would surely include past and current loans and all the debts. All investment accounts along with bank accounts, credit card accounts should be showed too and one should be totally transparent in this case.
Details On Accounts Receivable
Bank also requires account by account information, including aging and all the sales and payment history. Many people don’t know their accounts receivable and this might end up as a hurdle for them while applying for equipment loans.
Details On Accounts Payable
In this, most of the information is the same as accounts receivable but they might in addition demand credit references or companies that deal and sell to your business. The only purpose for this is that whether the company you mentioned can vouch for your payment behavior or not.
Complete Financial Statements
As discussed earlier, financial and bank statements are the most obvious thing that a bank would need to approve your equipment loans. They would demand a balance sheet which would be required to mention all the liabilities, business assets and all capital. You should also provide your profit and loss statements of at least back to three years.