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Please take a moment to share with me your thoughts or questions.
Your feedback is invaluable in helping me improve my Loan
Financing Guide. In addition, if you have future article ideas, I
would love to hear them.
I can be reached by email at inquiry@LoanFinancingGuide.com.
If you need to reach me faster, I welcome your call at
617-233-1405.
Your feedback is invaluable in helping me improve my Loan
Financing Guide. In addition, if you have future article ideas, I
would love to hear them.
I can be reached by email at inquiry@LoanFinancingGuide.com.
If you need to reach me faster, I welcome your call at
617-233-1405.
| FAQ [Frequently Asked Questions] |
| Copyright © 2005-2008. D. Neil Berdiev. All rights reserved. |
This section contains answers to frequently asked questions. Please use
the feedback section above to send me your questions.
Due to a significant number of inquiries, I may be unable to respond to
each of you individually. However, I will identify the common areas of
interest and provide you with answers.
Special thanks to Dina and Peter for helping me put together this page.
Do you work one on one with small business owners?
Yes, I do on a limited basis. I believe that it takes a considerable period
of time and involvement to have a positive impact on the financial health
of a small business. As a result, I can only work with a few business
owners or managers at a time. In addition, I prefer to work with
challenging cases to help businesses develop a strategy for successful
loan financing.
What if I could not find an answer to my problem in your book?
My book covers all the essentials you need to know to help you develop
a good financing plan and secure a loan. For obvious reasons, the book
cannot cover every possible scenario. However, the knowledge you
learn from my book will allow you to answer the majority of your
potential questions. If you still have questions after reading the book,
please let me know and I will do my best to get them answered either
personally or through my website.
Do you offer training on individual topics of loan financing?
Yes, I do teach seminars on various loan-related topics. They are
currently offered in New England. However, I am interested in traveling
farther, if my schedule permits. Please contact me if you would like to
learn the details. I recommend getting in touch with your local Chamber
of Commerce, Small Business Administration, Small Business
Development Center, town hall, or any other entity that may be willing
to host my event.
If there is one thing I need to remember when speaking with a lender,
what will it be?
If there is one thing I can recommend, it’ll be the following – show to
lenders by your every action that you will do everything possible to
repay the loan, if loan is approved, and how you plan to fulfill this
promise. It is also important not to verbalize that you promise to repay.
Words mean nothing to a lender, but your actions are the most
persuasive statement.
Here are some examples that can demonstrate to a lender your
trustworthiness:
I am starting a company. Should I tap into loans from my family
members and friends or should I go directly to a bank or another
financial company?
Some financial professionals believe that start-up companies should first
tap into loans from family and friends, while others think that option
should be the last resort. My book covers both, loans from traditional
sources (e.g. banks) as well as loans from family and friends. Start-up
companies are perceived to be higher risk and lenders frequently shy
away from lending to new companies, particularly those whose
industries are considered to be risky.
Should you decide to seek loans from family and friends, consider
creating legal documents to detail the terms of a loan or find a lawyer
who can help you with this task. You will also need to make
arrangements for automated loan payments or deal with check-writing
on an on-going basis. Furthermore, payments on loans from family and
friends do not allow you or your company to build credit history. If you
decided to take advantage of loans from family and friends, Circle
Lending of Waltham, MA is one of the companies that can help you
streamline the legal paperwork, automate payments, and much more.
If you have both options (traditional lenders and family and friends’
loans), decide which option is less expensive, less time consuming, and
will benefit your company in the long-term. Summarize pluses and
minuses and make a choice.
How important is it to make a good first impression on a loan officer?
Very, very important! You will be judged from the very first phone
conversation or meeting, and your goal is to get a loan officer to be
positively predisposed to listen to your loan request. You must emit
professionalism and come across as a businessman or businesswoman.
This is the first step to being taken seriously. A lender will be trying to
determine if you can be trusted with the loan. Put away the passion for
your business temporarily. Convert all this positive energy into
demonstrating that you can be trusted with the loan and will do
everything to repay it.
Be attentive to details: Have clean and crisp business cards; Carry a pen,
a PDA or a daily planner; Wear clean and pressed clothes and shined
shoes; Prepare a list of referrals and letters of references; Be punctual
or let the lender know that you are running behind schedule or cannot
keep an appointment; Address all lender’s questions and, as much as
possible, his or her needs; Follow up promptly; Always keep your
promises; and Meet the expectations you set. I know that these
suggestions may sound very basic to some of you, but many small
business owners tend to forget them.
I like using credit cards to finance my business, but my financial
advisor tells me not to. How can I persuade him that credit cards are
not a bad idea?
I agree with your financial advisor. Business credit card debt is quite
easy to secure and increase; however, the moment you slip and send
your payment late, the promotional rate will quickly turn into the 20%+
default rate with a variety of punitive fees. At this point you may be
struggling to keep up with interest payments with little chance of
repaying the principal.
There are examples of successful business financing with credit card
debt, but those small business owners used credit cards on a limited
basis and as a temporary source of financing. Credit card lines are just
like lines of credit – short-term financing vehicles. Unlike lines of credit,
however, they are usually much less forgiving when you make a
mistake. I have seen small businesses fold under the burden of credit
card debt too many times to change my opinion about credit card
financing. If you decide to use credit card debt as a limited financing
tool, I urge you to read the credit card agreements, particularly focusing
on rate and pricing structure, provisions in case of default, and your
rights and responsibilities. (Do not fall into the 0% interest and $0 fee
promotional trap!)
How much time should I spend on writing a business plan before
applying for a loan?
There is no right or wrong answer. It all depends on whether you are
writing a business plan for the first time and whether your company is a
start-up or an already-existing business. A business plan may not be
required based on the size of your loan request, your company’s time in
business, and your lenders’ requirements. Ask your prospective lenders
prior to investing a significant amount of time writing a business plan.
Your timeline will also depend on how urgently your company needs a
loan. My rule of thumb is to allow 2 to 4 weeks writing time if you
want to create a meaningful plan and have enough time to develop its
key points. Remember that you are writing your plan not just for
prospective lenders but also for your own sake. If you rush through
writing a business plan, it may come back to haunt you in the form of a
turned down loan request or your business failing to make loan
payments due to miscalculations. Here are a few suggestions:
I do not want to give a personal guarantee for my business loan. Do I
have a choice?
A personal guarantee provides an added assurance that you are serious
about running your business and repaying the loan. A personal guarantee
is particularly important when you invest limited equity in your business.
It allows lenders to pursue your personal assets to recover their loans, if
loans are in default. Some believe that the guarantee serves as a
psychological reminder about your loan obligation. The majority of small
business loans I have had an opportunity to work with required the
owner’s personal guarantee. So, very often you will not have a choice.
However, it does not hurt to ask your lender on what conditions, if any,
he or she will consider waiving the personal guarantee. Perhaps you
may be asked to put more money into your business and/or provide
additional collateral. If you are not able or willing to offer concessions,
then not providing a guarantee may cost you the loan. However, if you
believe your loan request is strong enough on its own merits, inform
your lender that the personal guarantee requirement is a deal breaker.
I have been applying for business loans for four months and stopped
counting how many banks and financing companies I went to. Is
there any help for me?
You should always evaluate your chances of securing a loan before
applying for one. If several of your loan applications have already been
rejected, this indicates a trend and it is a good time to get back to the
drawing board to figure out what you are doing wrong.
Ask lenders why your requests were rejected. Quite often a written
rejection response you receive in the mail may be too concise or unclear
about the real reason for loan decline. Speak with a lender and ask for
details. This is why it is very important to be polite and professional
even when you are disappointed and angry with the lender’s decision
not to grant you a loan. Such behavior will give you a chance to ask
what you could have done differently or better. Based on the
information you gather, make changes to your loan request before
applying again. If you are getting signals that your business is not likely
to qualify for a loan in the near term, don’t be afraid to develop a long
term plan to reach the point when your business is able to qualify. This
is a more responsible choice than wasting your time applying and
hoping for a fluke to help you obtain a loan.
the feedback section above to send me your questions.
Due to a significant number of inquiries, I may be unable to respond to
each of you individually. However, I will identify the common areas of
interest and provide you with answers.
Special thanks to Dina and Peter for helping me put together this page.
Do you work one on one with small business owners?
Yes, I do on a limited basis. I believe that it takes a considerable period
of time and involvement to have a positive impact on the financial health
of a small business. As a result, I can only work with a few business
owners or managers at a time. In addition, I prefer to work with
challenging cases to help businesses develop a strategy for successful
loan financing.
What if I could not find an answer to my problem in your book?
My book covers all the essentials you need to know to help you develop
a good financing plan and secure a loan. For obvious reasons, the book
cannot cover every possible scenario. However, the knowledge you
learn from my book will allow you to answer the majority of your
potential questions. If you still have questions after reading the book,
please let me know and I will do my best to get them answered either
personally or through my website.
Do you offer training on individual topics of loan financing?
Yes, I do teach seminars on various loan-related topics. They are
currently offered in New England. However, I am interested in traveling
farther, if my schedule permits. Please contact me if you would like to
learn the details. I recommend getting in touch with your local Chamber
of Commerce, Small Business Administration, Small Business
Development Center, town hall, or any other entity that may be willing
to host my event.
If there is one thing I need to remember when speaking with a lender,
what will it be?
If there is one thing I can recommend, it’ll be the following – show to
lenders by your every action that you will do everything possible to
repay the loan, if loan is approved, and how you plan to fulfill this
promise. It is also important not to verbalize that you promise to repay.
Words mean nothing to a lender, but your actions are the most
persuasive statement.
Here are some examples that can demonstrate to a lender your
trustworthiness:
- Repayment of business loans in the past.
- Repayment of personal loans in the past.
- Absence of or no recent delinquencies.
- Absence of or no recent derogatory information from personal or
business creditors. - Timely payments to your suppliers.
- Verifiable examples of difficult personal and business situations
that threatened loan repayment, but you kept your word and paid
off your debt obligations.
I am starting a company. Should I tap into loans from my family
members and friends or should I go directly to a bank or another
financial company?
Some financial professionals believe that start-up companies should first
tap into loans from family and friends, while others think that option
should be the last resort. My book covers both, loans from traditional
sources (e.g. banks) as well as loans from family and friends. Start-up
companies are perceived to be higher risk and lenders frequently shy
away from lending to new companies, particularly those whose
industries are considered to be risky.
Should you decide to seek loans from family and friends, consider
creating legal documents to detail the terms of a loan or find a lawyer
who can help you with this task. You will also need to make
arrangements for automated loan payments or deal with check-writing
on an on-going basis. Furthermore, payments on loans from family and
friends do not allow you or your company to build credit history. If you
decided to take advantage of loans from family and friends, Circle
Lending of Waltham, MA is one of the companies that can help you
streamline the legal paperwork, automate payments, and much more.
If you have both options (traditional lenders and family and friends’
loans), decide which option is less expensive, less time consuming, and
will benefit your company in the long-term. Summarize pluses and
minuses and make a choice.
How important is it to make a good first impression on a loan officer?
Very, very important! You will be judged from the very first phone
conversation or meeting, and your goal is to get a loan officer to be
positively predisposed to listen to your loan request. You must emit
professionalism and come across as a businessman or businesswoman.
This is the first step to being taken seriously. A lender will be trying to
determine if you can be trusted with the loan. Put away the passion for
your business temporarily. Convert all this positive energy into
demonstrating that you can be trusted with the loan and will do
everything to repay it.
Be attentive to details: Have clean and crisp business cards; Carry a pen,
a PDA or a daily planner; Wear clean and pressed clothes and shined
shoes; Prepare a list of referrals and letters of references; Be punctual
or let the lender know that you are running behind schedule or cannot
keep an appointment; Address all lender’s questions and, as much as
possible, his or her needs; Follow up promptly; Always keep your
promises; and Meet the expectations you set. I know that these
suggestions may sound very basic to some of you, but many small
business owners tend to forget them.
I like using credit cards to finance my business, but my financial
advisor tells me not to. How can I persuade him that credit cards are
not a bad idea?
I agree with your financial advisor. Business credit card debt is quite
easy to secure and increase; however, the moment you slip and send
your payment late, the promotional rate will quickly turn into the 20%+
default rate with a variety of punitive fees. At this point you may be
struggling to keep up with interest payments with little chance of
repaying the principal.
There are examples of successful business financing with credit card
debt, but those small business owners used credit cards on a limited
basis and as a temporary source of financing. Credit card lines are just
like lines of credit – short-term financing vehicles. Unlike lines of credit,
however, they are usually much less forgiving when you make a
mistake. I have seen small businesses fold under the burden of credit
card debt too many times to change my opinion about credit card
financing. If you decide to use credit card debt as a limited financing
tool, I urge you to read the credit card agreements, particularly focusing
on rate and pricing structure, provisions in case of default, and your
rights and responsibilities. (Do not fall into the 0% interest and $0 fee
promotional trap!)
How much time should I spend on writing a business plan before
applying for a loan?
There is no right or wrong answer. It all depends on whether you are
writing a business plan for the first time and whether your company is a
start-up or an already-existing business. A business plan may not be
required based on the size of your loan request, your company’s time in
business, and your lenders’ requirements. Ask your prospective lenders
prior to investing a significant amount of time writing a business plan.
Your timeline will also depend on how urgently your company needs a
loan. My rule of thumb is to allow 2 to 4 weeks writing time if you
want to create a meaningful plan and have enough time to develop its
key points. Remember that you are writing your plan not just for
prospective lenders but also for your own sake. If you rush through
writing a business plan, it may come back to haunt you in the form of a
turned down loan request or your business failing to make loan
payments due to miscalculations. Here are a few suggestions:
- Do NOT to try to write your plan overnight as it will lack proper
planning and any experienced lender will sense it. - Ask people with a financial and business background to critique
your plan. - Once your business plan is completed, take a break and return to
it in a few days for a fresh look. - Be reasonable and critical throughout the process.
I do not want to give a personal guarantee for my business loan. Do I
have a choice?
A personal guarantee provides an added assurance that you are serious
about running your business and repaying the loan. A personal guarantee
is particularly important when you invest limited equity in your business.
It allows lenders to pursue your personal assets to recover their loans, if
loans are in default. Some believe that the guarantee serves as a
psychological reminder about your loan obligation. The majority of small
business loans I have had an opportunity to work with required the
owner’s personal guarantee. So, very often you will not have a choice.
However, it does not hurt to ask your lender on what conditions, if any,
he or she will consider waiving the personal guarantee. Perhaps you
may be asked to put more money into your business and/or provide
additional collateral. If you are not able or willing to offer concessions,
then not providing a guarantee may cost you the loan. However, if you
believe your loan request is strong enough on its own merits, inform
your lender that the personal guarantee requirement is a deal breaker.
I have been applying for business loans for four months and stopped
counting how many banks and financing companies I went to. Is
there any help for me?
You should always evaluate your chances of securing a loan before
applying for one. If several of your loan applications have already been
rejected, this indicates a trend and it is a good time to get back to the
drawing board to figure out what you are doing wrong.
Ask lenders why your requests were rejected. Quite often a written
rejection response you receive in the mail may be too concise or unclear
about the real reason for loan decline. Speak with a lender and ask for
details. This is why it is very important to be polite and professional
even when you are disappointed and angry with the lender’s decision
not to grant you a loan. Such behavior will give you a chance to ask
what you could have done differently or better. Based on the
information you gather, make changes to your loan request before
applying again. If you are getting signals that your business is not likely
to qualify for a loan in the near term, don’t be afraid to develop a long
term plan to reach the point when your business is able to qualify. This
is a more responsible choice than wasting your time applying and
hoping for a fluke to help you obtain a loan.
| Contact & FAQ |
| Loan Financing Guide for Small Business Owners |
| "Empowering Small Businesses" |