A lot of us are very uncomfortable talking about money, whether that means negotiating your salary, asking for a sale, or asking for a loan. So the thought of going to the bank to get a loan can be very intimidating.
The loan process seems somewhat mysterious. Wouldn’t it by nice to know where bankers are coming from? Then you would be better positioned to get the money you need.
3 things to understand about your banker
#1 – Banks can’t afford to lose money.
A lot of people don’t realize that banks operate on relatively thin profit margins. So, contrary to popular belief, they don’t make that much money on every loan.
The biggest question every banker has when looking at every loan proposal is …
Will we get paid back?
They’re more concerned about the return OF their investment than the return ON their investment. That comes later.
#2 – Banks don’t fund start-ups.
This is perhaps one of the biggest misperceptions in the business world. People think the bank is the best place to go for money they need to start a business.
To which we say, reread our first point! Bankers are relatively risk averse for the reasons stated above and more. So banks don’t tend to lend money to new, unproven firms.
You might be saying, “But I know people who got money to start their business from a bank.” Here’s the distinction – the bank wasn’t loaning money to their BUSINESS; they loaned them money as individuals FOR their business. If you look deeper, you’ll find that, in almost every case, they secured the loan with equity in their house or some other asset.
#3 – Banks need to lend money.
That’s their business. So if you need money, and you can prove that you can pay it back, and you have some assets to secure the loan, go to the bank with confidence!
Your bank is just like your favorite video store.
Video stores rent DVDs for a fee. Banks rent money for a fee. So going to the bank is just like renting a movie. You have to return the movie and pay a fee. And hey, unlike video stores, bankers don’t charge their fees upfront!
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Our bigg quote today is by the great Stephen Covey:
Understand your banker’s needs so you stand to get your money needs.
Next time, we’ll discuss how to offer criticism without being critical. Until then, here’s to your bigg success!
(Image by svilen001)