Getting to Yes – Becoming Loan Ready
Having trouble getting approved for financing? Declined by a lender and confused as to why? New to loans and want to know what it takes?
You are not alone. It can be tough to get a bank loan, and when a lender says “No,” they really mean “Not Yet.” But it isn’t always clear how to get to “Yes” and what next steps you can take to improve your application.
Use the below MCNW guide to prepare your application and get to “Yes.”
Did you know MCNW provides loans for small businesses who are not yet able to get bank financing? If this sounds like you, let’s talk – fill out this form to connect with a MCNW Loan Officer who can answer your questions and help you move forward.
Do you have a history of timely, reliable repayment? Do you have active collections or other outstanding negative items weighing down your credit? Do you have credit cards that are maxed out? At MCNW we want to see credit scores above 550 (the higher the better) and without active negative items such as delinquencies, collections, bankruptcies or liens in the last 12 months.
Action Items to Improve Your Credit:
- Learn more about how credit works
- Pay your bills and debts on time
- Pay off outstanding collections, liens, judgments, etc.
- Do not exceed 30% of your available credit limits on revolving debt (i.e. credit cards)
- Sign up for credit counseling through MCNW
What are your current sources of income? Do you have a secondary source of income to your business? What do your monthly financials look like, including your monthly debt payments and housing payment? Do you have a financial buffer in your life or are you living paycheck to paycheck?
Action Items to Improve Your Budget:
- Create financial buffer by building your income and reducing debt and expenses
- For startups, showing a secondary source of income to your business is incredibly helpful
- Research and utilize a debt repayment strategy to reduce you loan balances and pay down debt
Business Financials and Projections
What do your business financials look like? Are your projections moving forward realistic? Have you researched your costs and have a good grasp of what lies ahead? Is your business cash flow sufficient to cover the proposed debt and monthly payment?
Action Items for your Business Financials:
- Keep up-to-date and accurate financial records, including monthly records and filing taxes
- Demonstrate that your business financials can service the proposed debt and payment
- Have cash on hand to help with project costs and cash flow variance
Investment to Loan
Do you have funds saved to contribute to this project? How much can you contribute at this point in time? How much are you able to contribute as compared to the loan amount?
Action Items to Show Client Investment
- Strive to save at least 10% of the total loan request to contribute
- Pursue additional financing such as grants or IDAs, family support, crowdfunding, etc.
Do you have assets you are willing and able to pledge as security for this loan? Assets include business equipment, paid off vehicles (business or personal), equity in a home, or other savings such as certificates of deposit.
Action Items on Collateral:
- Build assets in your business and personal life
- Pay off vehicle debt, equipment loans, build equity in a home, and build up savings
Experience and Business Analysis
How have you prepared yourself to be successful in this venture? Do you have experience, education, and/or proof of concept for your business? Do you have a clear and cohesive plan, including an understanding of your target market and what makes you different from your competition? What is the business opportunity? Are you investing in the growth of your business with your proposed use of funds?
- Gain experience by working in your industry or field
- Make a clear and compelling case for the business opportunity
- Demonstrate you are investing in long-term business assets with your proposed use of funds
If you are looking for financing for your business, let’s talk. At MCNW, our goal is to get you the financing you need while you work towards becoming “bankable” or “loan ready.” To start the process, fill out an online loan inquiry and a MCNW Loan Officer will contact you to discuss your financing options and next steps moving forward.
At MCNW we fill the gap that conventional lending leaves behind. As a mission-based lender, we prioritize disadvantaged and untapped groups such as entrepreneurs of color, women, veterans, low-income or net worth individuals, as well as startups or businesses who are not yet bank ready. This also includes startups and existing businesses that are not able to access bank financing due to time in business, imperfect credit, or those that are not yet profitable.