It’s all over the news. The economy is bad. Investments are shaky. People are defaulting on loans. Businesses are going under. Banks are foreclosing on properties. Money is tight. Credit is tight. You hear a lot of “So good luck getting a loan”… But that’s not really the whole picture.
Interest rates are low. Merchants need sales. Real estate prices are down. And although they might not flaunt the fact, banks and credit unions need your loan business now more than ever. That loan just needs to be a safe investment for them. From that perspective, it’s a great time to make a purchase and leverage your investment with a loanSo how do you convince your bank or credit union to give you a loan in this economy?
Here are a few steps to help you.
- Build a relationship with your loan officer. Your loan officer is a person, just like you. They will most likely have a mortgage, an auto loan, kids that need braces, and a variety of financial challenges, just like you do. So get to know them. Give them a look into your life, and let them know that you are serious about your financial future. If you are looking for a business loan, let them know how serious you are about building a successful business. After all, do you take the people that you deal with any more seriously than they take themselves?
- Cover all your bases. Your loan officer sees failure all the time, and knows that it can happen to the best of people and businesses. One of the best ways to gain your loan officer’s trust is to tell them all the ways that you might fail, and what plans you have in place should you need to meet the challenge of a financial hardship or failure. When you consider possible failure scenarios, don’t forget the “key personnel” scenario. If you end up unable to work, or even die, how does the bank or credit union get their money back?
- Be sure to give as well as receive. Your bank or credit union needs your business; all of your business. They want your loyalty, so earn theirs by giving them a bigger piece of your “financial pie.” Move over your deposit accounts and credit cards to the financial institution that is considering your loan. It’s a great negotiating tactic, and might even lower the interest rate that you receive on your loan. You probably wouldn’t automatically trust someone who just wants to borrow from you without giving you anything; why should the financial institution?
- Know the numbers. If you are looking for a business loan, be aware that your bank or credit union will compare how well your business runs compared to other businesses of the same type. One of the measuring sticks that financial institutions will use is the Risk Management Association’s Annual Statement Studies, or RMA. That document includes the operating results of about 400 different types of businesses, and will give you a good idea about the key ratios that your loan officer would expect to see in a favorable financial statement or plan. You should be able to find that document at your local library.
So remember, we are all in this together. Your financial success helps bolster the economy, as well as your financial institution’s profits. It’s in everyone’s best interest for you to succeed.