The word borrowing connotes so much for some people and I am privileged to meet influential people who are very averse to borrowing or which ever flowery term used to describe it. In this post, I intent to highlight major portions of the book as it entails successful ways of borrowing.
Chapter 1 – Know Your Wants
Lesson from Chapter 1: If you approach a bank without knowing what you want the funds for and how you intend to repay, then you will not be taken seriously."Inexperience with borrowing procedures often creates resentment and bitterness."......."It is important that you realise that the bank lending you funds is not doing you a favour, it is in the business of intermediation which requires trust from each party, i.e. the depositor on one hand, and the borrower on the other hand. To ensure that the bank earns the trust of both parties, it has to ensure that controls are put in place that ensures the total commitment of both parties. The conditions found in an offer letter, though negotiable most times, seek to ensure discipline of the borrowing party.
Knowledge of the financial facts of business life could have saved........ the embarrassment of losing their tempers. Even more important, such information would have helped them to borrow money at a time when their businesses needed it badly."
Lesson 2: Approach a bank that will suit the type of lending you require, do NOT be sentimental"Every bank views all customers as a potential credit risk. This, in plain words, means that a bank believes that every one of its customers has the ability to fail to agree to conditions in accordance with agreed terms. Thus, the difference between one customer and another is the varying degree of risk, which the bank strives to manage, while carrying out its business of intermediation."
"......it is very important to search for a bank which will support the sort of funding you will require.......also important to note that banks are much more comfortable
lending money to corporate entities, partnerships and sole proprietors in that order of importance respectively, than to individuals. The reason is obvious; corporate entities can outlive their owners, thus, loans can be recovered except in the event of declaration of bankruptcy and subsequently, winding up."
"When availing loans to any customer, a loan officer has been trained to use certain principles to serve as a guide. These principles are referred to as the Cs of Credit: Character, Capacity, Capital, Collateral and Conditions....."
Chapter 3 – In Simple Words
"Is your Business Credit Worthy?" "........must be aware that adequate financial data is a ‘Must’"
Lesson 3: To be taken serously, have a financial record showing the financial health of your business or self handy either as a bank statement or at least 6 months unaudited financial statement showing the figures of your business. The banker or lender sees figures, nothing more, nothing less.
There is much more packed in the book explaining the details of how you can actually borrow without tears. A good number of people are actually well positioned to get funds from financial institutions however not adhering to simple "rules" do not enable them get these loans. I believe sourcing for funds is as important as the funds itslef so why not take care to carry out some research to get the best funds as well as prepare for it.
I am aware that a well prepared individual that approaches a bank with all the details as outlined in my book will rather than get turned down, will most likely be informed by a credit officer at any financial instituition worth its salt, about how to make his or her application meet the bank's criteria as opposed to someone who just speculates about his or her needs.
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