Preposition Yourself For Your Business Loan

My experience with small business loan applicants reflects a reactionary mind set. In an effort to minimize the impact of taxes on income the tax preparers find every deduction, write off and loss possible, and some that are not possible. The end result appears to be very desirable until you apply for a loan. The people who decide if you get approved (underwriters) will be looking at hard documentation. Personal Financial Statements, Tax Returns and Credit reports. If real property is involved their could be surveys, environmental studies and leases to name a few. Most problems occur with income on tax returns. Many companies do such a good job of reducing their revenues that they appear to be broke on paper. Any business and it's owners should consider prepositioning itself/themselves for a loan in advance. If you think you might need funding in the near or far future should try to look good on their tax returns and financial statements both Business and Personal. Many of us are long on ideas and short on money. Don't cut yourself short by hiding too much of your income. If you are in good financial condition and it shows in your financial condition you may want to consider a line of credit now. Don't wait until you get into a cash flow squeeze to apply. It's like life insurance. Do not wait until you are sick to apply it is too late then.

Read The Fee Schedule

One of the most useful, yet boring, bochures from a bank is the fee schedule. What you find in there is most all the quirky fees that you can be charged for. Reading this list of fees is truly enlightening. It begins to make you think about things you would want to avoid. I can relate from personal experience that statement copies are very expensive. You may have a good relationship with your bank and they will give you a copy of your statement in time of need. What bankers know is that people tend to be careless with their statements. Point in case is a customer I once dealt with that needed a copy of her statement. She claimed not to have received it. I told her the cost of the copy and the time it would take to get it. She finally confessed that it may be on a pile of mail that she had at home. My policy is to keep my statements as long as I keep my tax returns. In my case that would be seven years. I store the statements with the tax returns from the same year as the statements. Some fees may not be in the fee schedule, beware the missing fees. You must be aware of what you can be charged for. Get the Schedule. The bank is required to give you one. Sit down with your favorite beverage and READ IT!!! It could save you hundreds of dollars.

Automatic Payments

Many merchants want you to make your monthly payments via a process called ACH (automatic clearing house). You authorize the business from which you are purchasing a service or product to debit your checking or charge account automatically. How convenient. You don't have to remember to write the check and your payments are never late. There could be a catch, though. One catch is when you want to stop the payment. This usually occurs with services. Many times the automatic payment doesn't stop. You end up paying and paying. Trying to get satisfaction from the offending business may take an act of congress.You may have to go to your bank and fill out some forms to get your money back. That process could take up to six weeks, although, usually not. Banks are usually good about working with you if you have a legitamit complaint. If you have online banking with bill pay try setting up your bill pay to automatically send the payments. That way you maintain control of your automatic payments.

Do You Have A Spare Bank?

It pays to plan ahead. Banks report events to various reporting agencies. When you bounce checks it is reporting the an agency that other banks subscribe to. If you get in a dispute with a bank about fees and charges don't think you can just walk away without dealing with the issue. For example your bank will report NSF (non sufficient funds) and OD (overdraft) charges to an agency like ChexSystems. Banks will also report an account being close with a negative balance. That means that any bank that is a member of ChexSystems will know what happened and may not open an account for you. If you cannot reconcile with your bank then you have at least two alternatives. Go to a non-CheckSystem bank or already have an account opened at another bank. Then you can simply switch banks. What I am suggesting here is to open two accounts at the same time. Don't wait until you have a problem and then open the account. The reporting agencies will do a follow up on new accounts and negative activity will be reported to the new bank even after the account has been opened. I am not saying you can just give your bank the shaft and go to your other bank. What I am saying is this will give you time to work out your differences, if possible, and still be able to operate. Remember that debits you owe and do not pay could be reported on your credit report and turned over to a collection agency. You want to avoid that if possible.

Protect Your Credit Score!

What's your credit score? I have asked that to many people and few people have the answer. I used to ask how is your credit and most of the time the answer would be "good", followed by "I did have a couple of problems, but they are all cleared up now". Guess what? Those "problems" still show up on your credit history. I am not going into what a credit report is or who the reporters are, but for now just know they exist. Credit reports contain a record of past and current financial conduct. If you failed to pay a bill it will, most likely, show on your credit report. If you pay late, that will show. If you apply for a loan and a credit report is pulled it will show on your credit report. All of those things, including the amount of debt, tax leins , accounts that have gone into collections and bankruptcy will be included on the report. The point is your financial conduct is being tracked. You can't walk away from creditors or other bills owing. It will follow you for many years. I once had a customer that had disputed a payment to a retailer for just under $10.00. The retailer was wrong, but it wasn't fixed. It was on his credit report and he was declined a loan. Your are allowed one free credit report a year at annualcreditreports.com website. If you already have a low credit score you need to take action to boost it up. Start paying on time, pay old debts (get a letter from the debtor stating it is paid) stop applying for credit. You have to work at it. I would not advise a credit repair agency unless they can prove they have a working model of a time machine. They can fix incorrect entries, but so can you. They can't make correct entries go away that is "history" and they can't change that.

Check 21

In 2004 a process of clearing checks was instituted that allowed businesses, including banks, to change your paper check into an electronic transaction. This means that businesses can collect money from you much faster than they did in the past. Once a company gets your check they can scan the check with a special scanner. The check is then converted into an electronic format and sent to your bank. The paper check can be destroyed and an electronic version forwarded to the bank. The days of writing a check and racing to the bank to make a deposit are, for the most part, over. We had all better figure out a way to keep more cash in our accounts.