In my 40-year career I have met with 100’s of business people seeking loans. It is the fun part of what I do. But I’ve also seen some common mistakes that entrepreneurs make, particularly when talking to a banker. Sometimes I think bankers speak a different language than entrepreneurs. Be very careful that what you say is what you want the banker to hear! For example, here are 4 of the most commonly misinterpreted phrases that will kill your loan application.
• “My present bank doesn’t understand my business.” This seems reasonable, but your banker hears: “My business is in deep trouble, I am in denial, and my bank is angry with my business’ performance.” You can now count on a lot of extra scrutiny from the new bank!
• “I want to explain a few things before giving you my financial statements.” Sure you do. But don’t. When you say this, your banker hears: “My financials are lousy and you probably won’t want to make me a loan based on financial facts!” Save your breath and fix your books first.
• “It’s hard to do projections in my business” That may well be true, but all that your banker hears is: “I have no idea what my business model is and I am operating on hope.” As you know, hope is not a strategy.
• “I don’t want to guarantee my loan.” Really? You just told your banker: “My business is too risky for me… I want you to take the risk.” But bankers do not take risks. Loan denied. Instead of excuses and weak explanations, give your banker a clear presentation – paint a picture of your future business that makes sense, fits his expectations and “sells” your opportunity or loan proposal.
When you learn the language of bankers, your loan proposal won’t be misinterpreted! You may even get the financing you need!