Bank Capital Raising

While bank capital raising for a business or venture, one should keep in mind that it has to be paid in fixed period. It may also take you to pay back in the form of interest to the banks or financial institution.

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Without a previous track record in business, bank capital raising may be difficult. Banks cite risk factors and increasing costs of servicing small accounts as the primary reasons for minimizing their exposure to small businesses. Still, it can be done. Here are some ideas to a successful bank capital raising.

There are three “c’s” that bankers check when dealing with bank capital raising; the character, credit and collateral.

Character doesn’t only mean that you’re free from criminal liabilities, rather, that the banker feels confident that you can be trusted. That means, even if your business runs down the pitfall. Your ties to the community such as long residence, family ties, and home ownership, clean credit history, and mortgage payments are looked into by the bank to evaluate whether you’re apt for bank capital raising. Bankers like good character and good credit, but they also live for solid collateral such as equipment, buildings and trucks and that kind of stuff

But if the banks won’t agree with your business plans, you can always choose to apply as a consumer than a business entrepreneur. They are more lenient to consumers so you can borrow the money from the bank as a consumer and then turn around and personally invest the funds in your business.

Remember that the bank needs investors like you to keep their business running, so don’t be scared to raise that bank capital. Increase your chances of getting a loan by looking for a bank that is familiar with your industry and who has done business with companies like yours. Seek out banks that are active in small business financing.

As a budding businessman, ascertain that you are systematically geared up when you go to your banker’s office. Anticipate the questions that he/she will ask and the requirements that will be asked from you. Do not stretch the truth in your loan application. It is best to keep projections, assets lists and collateral statements on the conservative side. Be sure all your documents are neat, legible and organized in a cohesive and attractive manner. Type all your loan documents. Handwritten documents look unprofessional.

Bear in minds that the first loan is usually the hardest to get. Bankers prefer to lend money to borrowers who have borrowed at least once and have paid back at least one loan on time. Unlike venture capitalists who would invest despite big risks, bankers would rather go for low-risk, low profit ventures.

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