Team Financing: Blind Date or Job Candidacy?

Applying for equipment financing or a working capital loan shouldn’t be like going on a blind date where you only tell the other person the best things about yourself and leave out the not-so-stellar parts. The analogy for the application process should be more like running for public office where everything that is hidden in those closets comes to light. It makes sense to put all your cards on the table because a late discovery of a tax lien or default, even if it was many years ago, can crush your chances of approval. It may also decrease your chances of working with that financial broker again.

So you don’t waste your or your lender’s time, disclose all negatives early on when applying for business financing. Include detailed explanations of those events when possible; A medical issue or a key client moving can be valid reasons for a financial downturn in your business, and can sometimes be overcome by getting an approval. If you have documentation; letters, statements, etc. to back up your explanations, that will strengthen your chances of making a clear case for the negative things that happened. At least you will show effort and develop the “character” part of your application that many applicants underestimate. Remember, this is a people business and perception still adds to the equation.

In cases where negatives are so significant that they can’t be resolved, it’s better to know sooner rather than later to save you time and effort and get Plan “B” started. There is always a plan “B”…which includes the use of riskier lenders who specialize in approving clients with mild to severe credit problems. If an offer from a riskier lender is not acceptable, you still have the option to decline without any expense on your part other than time and effort.

In business, as in most other parts of life, the goal is to achieve a positive outcome quickly and efficiently. The sooner you know if your team acquisition or expansion can be approved, the faster you can move on to other strategies for your business success. We know that the pain point for many companies is going through the paperwork process which for the most part cannot be avoided, but if you share the problems you have had in the past, many financial agents can preview your profile without obtain credit or require a complete financial package before having a good idea if you can be approved or not. That way, if you have to go through the paperwork, you’ll know you’re headed toward likely approval.