Applying for equipment financing or a working capital loan should not be like going blindly, where you just tell the other the best things about yourself and miss the less stellar parts. The analogy of the application process should be more like applying for a public office, where everything hidden in these cabinets comes out. It makes sense to put all your cards on the table, because the late detection of tax withholding or non-compliance, even if it was many years ago, can crush your chances of approval. This can also reduce your chances of working with this financial agent again.
In order not to waste your time and the time of your lender, reveal everything negative at the beginning when you apply for business financing. Include explanations detailing these events where possible; A medical problem or the removal of a key customer can be a valid cause of financial failure in your business and can sometimes be overcome with approval. If you have documentation; letters, statements, etc. to support your explanations, which will increase your chances of giving a clear argument for the negative things that have happened. At least that will show effort and build the part of the “symbols” of your application that many candidates underestimate. Remember, this is a business for people and perception still adds to the equation.
In cases where the negatives are so significant that they cannot be processed, it is best to know sooner rather than later to save time and effort so that Plan B can begin. There is always a plan “B” … which includes the use of higher risk lenders who specialize in approving customers with mild to severe credit problems. If an offer from a higher risk lender is not acceptable, you still have the choice to decline it at no cost to you, other than time and effort.
In business, as in most other parts of life, the goal is to achieve a positive result quickly and efficiently. The sooner you know if your equipment can be approved, the sooner you can move on to other strategies for your business success. We know that the pain for many companies goes through paperwork, which for the most part is unavoidable, but if you share problems you’ve had in the past, many financial agents can visualize your account without taking out a loan or require a full financial package before you have a good idea of whether you can be approved or not. That way, if you still have to go through the paper shuffle, you’ll find that it’s headed for probable approval.