Getting bank loans is becoming increasingly difficult, especially with the rise of startups and people aiming for financial freedom. Bank terms are fairly strict but they look for the following when going through a loan application:

Collateral Value

Collateral is any asset that you agree to give to your lender if you end up being a defaulter for your loan payment. People generally prefer secured loans, as they offer access to large sums with reasonable interest rates. Secured loans require you to put something up as collateral that they can recoup in the event you're unable to pay them, saving them from losses.

Your collateral also dictates the amount of money you can borrow from the bank. Suppose you put up your home as collateral, which costs $450,000. You can't borrow more than that amount. It helps minimize the loss and threat to the bank.

Your Liquid Assets

Liquid assets are assets that you can easily sell quickly to get cash. These include cash, any form of bonds, and stocks, among others. Banks tend to keep a check on other assets that they can seek, in case your collateral doesn't make up for the loan.

Similarly, they’re aware that these assets can easily be sold and you can use them to make up for any financial setback that your business goes through. In some cases, these can help minimize your interest rate as you come off as a reliable entity that will be able to pay back loans on time.

Business Plan

Banks don't want to loan money to any unreliable entities so they look into your business plan documents. They pay attention to your cash flow, income statements, and other projections to ensure you'll be able to pay them back.

As they regularly get loan requests and want to minimize having to repossess assets and go through the entire process, they shortlist candidates by focusing on the technical details.

Getting a bank loan allows people to get liquid assets without having to burn their reserves for operational costs. Adept Business Plans offers you the opportunity to devise a custom business plan that can help you improve your chance of getting those bank loans.

If you wish to hire a business plan writer that understands what banks look for, Adept Business Plans has the necessary business plan writing help. If you’re from abroad and require an immigration business plan writer, they also offer help with PNP applications.

When planning how to finance your business, one of the first things and perhaps the major factor that you should consider is to write a good business plan. Having a good business plan can prevent you from labouring yourself before convincing your bank, investors and your friends to invest in your business.