What a Banker must See to Lend to You.

Discussion in 'General Forum' started by Izu, Oct 27, 2016.

  1. Izu

    Izu Admin Staff Member

    Lenders all over the world behave alike. They suspect that you may not pay back any loan given to you and their suspicion is backed with facts.
    There are many apparent good men of the world and faith who have failed to pay their loans hence forcing the lender to close shop.
    Therefore, the lender needs to be convinced beyond doubts that you can repay beyond your verbal assurances before he lends to you.
    If you want to borrow from the bank, please be prepared to prove the following to your banker or lender:
    1. Experience: Unlike in marriage where virginity is a virtue, a banker must see clear evidence that you have done it (i.e your business) several times and have mastered it. Your account and financial statements must testify to this.
    2. Fall Back: A banker is trained not to share in your vision or dream or prophecy of your success. He believes that no matter how good a plan is, it may fail. You must present to him how you can repay the loan assuming that the business into which you applied the loans fails. This comfort or collateral must be separate from the business the loan is to finance.
    3. Character: Once the banker finds out that you have a reputation of not repaying your debts or not settling your trade obligations even with your suppliers or trade creditors or owe rent, he will cancel the loan even if you have experience and a good collateral to pledge.
    4. Circle of Friends: Bankers are trained to have their ears on the ground and observe the lifestyles of their customers. Association with police, armed forces and public show of force tells a banker that getting you to pay back your loan or to realize his collateral when you default would be difficult. You may beat up your banker.
    5. Your Business Profit Margin: A good lender would first calculate what profit is left for you after deduction of bank charges. Many borrowers feel sad after repaying the bank as little or nothing would be left for their efforts. They plan to punish the bank in the second draw down.
    6. Business Environment: A lender will independently check to know if the prevailing economic conditions would allow you borrow and still repay your loan. He will check your value-chain and study the Demand pattern of your products or services to know if you can still repay if situation gets worse.
    7. Partnership: A loan applicant who has a partner or more, stands more chance of getting a loan than a one-man business. The risk is lowered as the lender believes that better quality decisions are taken with more than one head. Liabilities are also shared.
    On the whole, please always remember that bankers are trained to be self-preservative. Don't mistake their customer service or eye-service to mean gullibility; the guys that approve loans in the bank are trained to be dispassionate. They are pessimists.
    Lenders don't act on your faith or convictions and would mostly say "no" to your loan request if you don't pass the above tests.
    Interestingly, many wealthy individuals subject even their relations and friends to these same tests, where applicable, before advancing soft loans to them.

    By Anayo Nwosu

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