Why did they say No??

The bank said No?!?!? But why? Let's consider this... and look beyond the obvious and see below the surface. And how it affects more than just you. It's not all about you!

Good banks protect you. They do this by saying 'no' to you even when you think it should be a 'yes!'. You wanted that loan so badly you could taste it. The truth is, inherently we have blind spots! How is that?

As a business owner we think we know what need based on a series of analytical theories we have run our mind through. We possibly have charts, projection graphs, scenarios, business plans etc. We know what we are doing right? You might! But consider this.

When banks decide when to lend, they factor in a lot more than whether a business has a plan. They use historical data of the business, credit history, cash flow analysis etc. Remember the 5 C's of credit?

Capacity, Capital, Collateral, Conditions and Character. These areas paint a picture about the business. This picture has many different features. It has trends, profits or losses, it tells a story of good decision making and bad, whether an owner is investing in the business or using it to support a lifestyle, for example and banks also understand trends in industry. We study and know because we need to know.

Banks although requiring assets to collateralize, we don't want to take possession of them if a business defaults. Bottom line is we don't want you or your business to fail. We have to look out for you and although at the time it may seem like a bank is holding you back, they are actually preventing further harm to your business by preventing over leverage of it. Consider something else.

The strength of a bank relies heavily on a lending risk tolerance built in and designed to protect our client depositors. Banks can only use a certain percentage of deposits to lend out. If there is a lot of default on loans, we put our client's funds at risk. Our reputation and our client's trust relies on our ability to lend soundly. Seek to understand why a bank says no and then improve your position so that the risk is reduced when you borrow for your business. We are truly looking out for you too!