Even if you don’t have much collateral , with character and these tactics below, banks can still see you as a potential customer for their loan:
1. Build a relationship with your bank: Many SME o
wners make the mistake of visiting their bank only when they’re in desperate need of a loan, but that hardly works. The way you need to have built a relationship with someone over time before you trust them with delicate details of your life is the same way bank
s need to have known you well enough before they can lend to your business. Build a solid relationship with your bank over time and your future requests will most likely be easier. Please note, your Bank is NOT just your relationship manager – build a relationship with the Institution – the Branch, the Product Managers, etc.
2. Keep a clear track record for your business: Even when you’ve built a great relationship with your bank, you must show a track record for your business. It will be hard to get a loan if your financial records are dicey, unclear, inconsistent or generally not existent. No matter how small the numbers are, make sure you’ve put them down!
3. Borrow money you’re sure you can pay back: After building a great relationship with your bank, loan a considerably small amount of money (relative to your capacity) and pay back before the due date. This will give you a track record of integrity and they’ll be more open to loan you a larger amount because you’ve paid back all you’ve ever borrowed from the bank. Remember it’s all about character and trust.
At the end of the day, Banks are looking to finance ‘bankable’ projects, because they make money from giving good loans. As an SME, you can be intentional about making your project one of the ‘bankable’ ones.
When you’ve built an excellent track record over time, banks will beg to finance your projects and loan you money!