3 Steps to Challenge & Change Lender Assumptions About Your Business | Finance > Financing & Credit from AllBusiness.com
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3 Steps to Challenge & Change Lender Assumptions About Your Business

Loan decisions are made on assumptions. Will you pay the loan? How? How does the lender know? If your business was challenged during the recession, take these steps to challenge and change the lender's assumptions that your business is (still) troubled.

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My husband met his orthopedic specialist when he was in a wheelchair and under the influence of narcotics due to a back injury. When the treatment was a success, the doctor told Bill he could resume his normal activities. Luckily, I was there!

What Is Normal?

I asked if that included chainsawing down trees. Or chopping wood. Hmmmmm... the doctor decided perhaps he should hold off on those. His perception of my husband was colored by the man in the wheelchair who could not follow a conversation -- not a chainsaw-wielding outdoorsman.

What Has Your Business Lender Seen Lately?

If your cash flow was tight the last time you sat down with your business lender, and you were a bit desperate -- and assuming things have improved -- here are three steps to take to shift the lender's perception of you:
  1. Set up a meeting before you need a loan. Invite the lender out to see the business. Show him or her the evidence of rehiring, new contracts with customers, and a buzzing business.
  2. Improve your personal finances. Be sure you have personally paid down credit cards and other debt. How is your personal liquidity? It is likely your personal guarantee will be required, and it needs to be worth something.
  3. Share your plans and strategies. A lender wants to know you have not been hiding your head in the sand during the recession. Sure, some of what you tried did not work, but what did? And how did you shift to take advantage of what worked and jettison what did not?

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