Many small business owners fail to realize that sooner or later, they’ll need a loan. Not only will they need a loan, they’ll need to have certain things in place in order to secure that loan! Sadly, within the African-American community, this is a topic that often gets put on the back burner. You’ll often hear people saying that they don’t need a loan, and they don’t want to owe anybody money.
This is a wake up call.
If you don’t have a rich uncle that can loan you the money that your small business needs……you’ll need those banks that can give you the loans! As a small business owner, your odds of surviving without that loan are slim! For those of you that realize that a loan will help you immensely with the success of your small business, let’s look at a few reasons why you may not get that loan initially!
1. You don’t understand that you have to prepare yourself to get the loan!
Regardless, at some point in time, you may need that loan. Even if you may not think so now, are you absolutely sure that you may not need it 2 years later? With that type of mindset, you steer far away from needing a loan until the situation arises. When you actually need the loan, you walk into the bank and get denied. The lack of knowledge into the loan preparation process is what keeps most small business owners revenue capped at the low six figures!
There’s a preparation that goes into getting a loan for your small business. You’ll have to file your taxes, do your bookkeeping (which you should really leave to an accountant that has specialized bookkeeping software), and have ANY and ALL records requested from the bank. In many instances, you’ll need revenue projections (which go in conjunction with your Key Performance Indicators, which we’ve spoken about before). Prepare now, so that you can succeed later!
2. You give up far too easily!
I’ll be perfectly honest here. Many African-American small business owners may have a tough time getting a loan. You’ll get turned down by many banks; you’ll get many no’s before you get that yes! What you don’t understand is that you may have to take the opportunities as they come! While you may not initially get the loans (because your bookkeeping isn’t in order, or because you don’t have any tangible assets that banks may reclaim if you default on loans), you must understand that banks NEED you in order to grow! They make money off of the interest accrued from your loan! You have to have thick skin and perseverance (and a good accountant or account manager!) in order to get that loan! Last, but certainly not least….
3. You lack the financial knowledge to get a loan!
It’s not as simple as going to a bank, and asking for a loan; there’s more that goes into it! Do you know your own profit margins? Do you know your KPI’s? Is your bookkeeping in order? Have you done your mid-year review? Do you have a proper accountant that has legitimate accounting and bookkeeping software? You don’t have to know everything under the sun when it comes to your business, but if you don’t speak the language and have the financial knowledge, it will be apparent when it comes time to talk loans!
Unless you have that rich relative that can just give you that loan that you need to get your business off the ground, you need the banks with the loans just as much as they need you! Stop making it difficult on yourself to get what you need to succeed!