SEVEN TIPS TO IMPRESS BANKERS
Banks offer both, term loans and overdraft facilities which businesses can use to increase their working capital. Here are certain best practices which partners can employ to get the best results through regular banking channels.
Many small businesses do not show profits or show less profit to pay lower income tax. If you need to impress bankers as well as potential investors, accurate balance sheets and proper incom tax returns help.
A healthy average quarterly balance helps businesses with proven track records to obtain unsecured loans or overdraft facilities without collateral. Typically, banks are willing to take a risk of up to three times the average quarterly balance for unsecured loans or overdraft sanctions. There are partners who have managed to get 5-6 times their quarterly balance as overdraft facilities.
Similarly, fixed assets such as real estate can be judiciously used to get an overdraft facility which is 1.5-3 times the market value of the collateral. Real estate rates are always going up, so remember to negotiate on the credit approvals and quantum of sanctions every year.
Bankers and NBFCs are impressed with purchase orders, contracts, authorized partnership agreements and other documents which help prove your credibility. While these documents alone can’t fetch you a loan, they will boost your chances of getting a loan at perhaps a lower than market interest rate.
Take extra care to maintain a healthy bank statement for at least six months prior to a loan request. Avoid check dishonors at any cost.
Get the company approved by different credit rating agencies. Consumer ratings by CIBIL of directors and promoters also help in impressing bankers.
Finally, remember that banking is a relationship business that works both ways, so form a strong relationship with the senior staff of the bank.