Banks are always willing to do business especially when it comes to loans but there are some reasons why banks won’t give you loans. They build relationships with their customers over some time to know if these customers are worth doing business with.
Some reasons why banks won’t give you a loan are discussed below, follow this advice and getting a loan from a bank will get easier for you.
You cannot predict people’s character unless they’ve been tested; some banks have been victims of this situation. These banks give loans to their customers believing they will pay back when due but it doesn’t happen like that. That’s when banks know the true character of their customers. Customers with character issues might be capable of paying back as at when due but they prefer to delay payments until they are being put under pressure by their bankers. You might have had an experience like this before whereby a friend comes to you for funds and promises to refund you in two weeks but your friend doesn’t keep to his promise after two weeks and then you will need to spend your time and money just to get your friend to pay back.
When you see traits like this you will know that person is not of good character and not willing to pay back the loan he took. You will not be willing to give a loan to such a person again because you’ve known the person’s character, that’s the same way banks operate too.
If you want to get a loan from banks, you should be willing to pay it back and not your bankers forcing you to pay back. You also need to be consistent with your words and actions.
Your statement of account
You see a lot of business people walk into banks wanting to access loan facilities; they claim they’ve been in business for long. But when asked to provide their statement of account, they don’t have anything to present. So, how do you believe such people have been in business for long as they don’t have anything to show for it?
Some of these people are telling the truth but still, it’s hard to believe them if they can’t prove it. These people prefer to do their transactions without involving banks to avoid bank charges or to reduce the tax they pay.
This is why it’s advisable to always do your transactions through banks, so you can have an accurate record of your business transactions. Doing banking transactions is now made easy with the availability of online banking. That means you don’t need to get to your bank to do transactions as you can do it from your home.
Do all your business transactions as often as possible through your bank, you can also use Internet banking to save an accurate record of your transactions.
Your line of business
Another reason why banks might not give you a loan is because they do not support your Line of business or you are requesting the wrong loan package for your business.
Take the right loan that supports your business. When you want to access the loan, make sure you request the right loan for your business. For instance, a customer requesting for term loan for an importation business might work but it’s not the best option for your business.
You might need to seek advice from your banker or a consultant to know the best loan package that works for your business.
Your credit history
Some customers seem to be good, these customers request for loan from their bank, and they seem to meet all requirements needed to access the loan. The bank sees good potential in them only for the bank to carry out a search and find out these customers have bad loans with another bank.
Well, sometimes this might happen due to negligence on the customer’s side. Probably he had almost paid off his loan at the other bank but didn’t monitor the repayment properly. But most times these customers purposely do it, they get a loan from one bank with the intention of not paying it back then they move to another bank to do the same thing. What some customers do is borrow a loan from one bank and use it to repay a loan they’ve gotten from another bank.
My advice is to do your best to maintain a good credit history and fund your account so loan repayment can be deducted easily deducted when due
Purpose of loan
You will see some businessmen requesting loans because others are doing it. This set of people don’t know the purpose for which they want to access the loan, they just want to get the loan first then they will decide on what they want to use it for later. Banks won’t do business with such people because the probability of them defaulting is high.
Another thing you should avoid is diverting loan funds for other purposes as this can lead to loss of funds and might make it difficult to repay the loan.
Know the purpose for which you need a loan. You should know the purpose for which you want to access a loan and stick to that purpose so as to achieve your goal. Focus really helps in business as it helps achieve the desired results you want.
You should know that sometimes security will be needed from you in order to access the loan, depending on the loan package you want to access. You can also access loans without security depending on the type of loan you want. Banks will tell you their requirements when you want to get a loan, once you meet those requirements, they can do business with you.
Basically what banks want to know is your capability and willingness to pay back the loan. Once you can prove yourself, banks feel more comfortable doing business with you.