Over the years, I’ve seen well-meaning, hardworking owners with great ideas expressed in their business plans get their applications declined. Today, we uncover three reasons that we hope will benefit the credit-seeking entrepreneur.
Bankers know that most business owners aren’t expected to match their banking knowledge and expertise. Being a master plumber, carpenter, or electrician doesn’t mean they can balance a cheque book or complete financial projections. Likewise for professionals who can repair your heart, teeth, or reduce your sentence from 5 years of prison time down to community service.
That expertise doesn’t automatically translate into understanding the rules and mechanics of the 5 Cs of credit. Simply put, being smart in one area doesn’t mean knowledge in another. And like the old saying goes, ‘What you don’t know can hurt you.’
1. Know your numbers.
“Give me as much as I can get!”
This statement is a huge detriment to your credibility as a business owner. Whether you have just started your business or have been in operation for some time but have not been as profitable as expected, it doesn’t excuse the need to know your numbers.
When you approach your lender, a vital part of the business plan must be the number. It can be the cost of equipment, a property or leaseholds, or a line of credit limit to help with working capital. Whatever the need, you must quantify by giving the number. Asking for “what you can get” indicates that there is really no clear plan or direction, and your character takes a major hit that can be hard to bounce back from.
2. Know your credit.
“I haven’t checked that in a while.”
Your credit history is your roadmap to your financial destination. Like any map, if you’re not checking where you are often, how can you ensure that you are still on the correct path? Even if you are on the path, how can you clock the time of arrival?
Knowing your score and checking your credit report helps you to stay on top of any derogatory item that negatively impacts your application. This is also true for persons who make every payment on time and protect their utilization. With fraud on the increase, many don’t know that they’ve become a victim of identity theft until the collection agency starts calling for payment on a credit card they never applied for.
Screaming for 40 minutes in a stranger’s ear doesn’t get the item removed from your report either. Checking your report, even once weekly, can save months of scrubbing time.
3. Protect your time. Know when your help is needed.
‘A jack of all trades is a master of none.’
We’ve all heard this saying before. While it may not be true in all cases, it is true enough for us to grasp its wisdom. Studies show that it takes about 10,000 hours to master a skill. That is roughly five years for someone working 40 hours per week. If you do everything in your business, while you may be gaining valuable skills, you are losing your most precious resource: your time.
Depending on the nature of your business, an application review will raise serious questions as to who does what. Your business plan must show that a part of the business’ growth includes having the necessary bodies in place to carry out important functions.
An example of this can be seen where a full-time employee presents an application for a business loan, with no intention of leaving their 9 to 5. The plan can be exceptionally laid out. What the banker sees is a novice swimmer planning to dive for the treasures of the Titanic.
The MECA Difference
Help also comes by way of building strong partnerships with external teams. A good accountant, legal advisor, consultant, real estate professional, etc., are all vital to the success of your business endeavors.
Your CPA, for instance, should be aware of your plans to purchase a new office in the next two years, before your taxes are filed. Your lawyer should be advised of a lawsuit before the court date. In the same way, you want to be prepared when you go to your bank appointment.
Get in touch with a MECA team member to discuss your capital needs. We give your request the ‘banker’s evaluation’ to ensure it is presentable the first time. Don’t leave it up to chance.
🔗Book A Free Discovery Call and let us help you get to a ‘Yes’.
MECA Capital Advisory offers Fractional Banking Office, where one of our experts will be integrated into your Finance Team to ensure you not only get bank-ready but stay bank-ready. Whether you need a bank-ready business plan, credible projections, or ongoing financial leadership through our Fractional Banking services, our role is simple: to ensure your business is not just prepared—but positioned for approval.
MECA Capital Advisory provides proactive, data-driven strategy that secures better terms and accelerates the funding process. Final price is assessed based on business complexity, industry sector, the current state of financial statements, and the specific scope of the engagement.
