DESPITE A MOUTH WATERING COLLATERAL WHY DO BANKS STILL FAIL TO GIVE LOANS?

If you ask an average man who need funds for a certain business why he did not go to the bank to get a loan, he will tell you "I don't have collateral".
Well it might be very shocking to let you know that the last thing the bank wants to see to be able to give you a loan is your collateral. Infact there is something called collateral lending which banks discourage. It is giving out a loan based on the collateral of the applicant.
Not that banks reject collaterals but it is no the first and most important thing. There are lots of people who have gotten a loan from banks without collateral in very large quantity.
So what do the banks need to see before they can release that money?
There are four major things you must possess.

1. You must be a current account holder.
Most banks don't recognize savings account holders as bonafide customers no matter how much you have in the account. You must have current account on the minimum given that you cannot open a corporate account.

2. Your characterDid I hear you say "what does my character have to with getting a loan"? Banks are not going to dear give a loan to a drug peddler or an armed robber for instance, else they become a party to crime and you know what that means to the bank.

3. Business plan
This is also very important. The banks need to see your plans, strategies and analysis of your proposed business. They need to know if the business you intend to use the money for will be able to generate their money back and will also stand the test of time. What is most important in your business plan is a detailed analysis of how you will spend the money, how much will the business generate, when the business will generate your prospected revenue and what strategies you intend to put in place to get your business to those that will need it and buy it. One thing you must not forget is that a written plan is not as complex as a winning plan. I strongly advice you not to try developing your business plan by yourself. That job is a lot professional; you need to employ the service of a business development or management consultant. They know the twist and turns that you will never be able to see. Well I am a business development and management consultant so I think I can help.

4. Your capacity
Yes, this is the most important thing you need. The bank is keenly interested in your capacity to spend the money they are about to give you without misappropriation. They don't want to give out money for a building project and you now use it to buy a car. The other thing is your capacity to pay back.
All these can be known by any good credit officer in your bank without seeing you. What they look at is your cash flow. Your cash flow is a measure of your inflow and outflow ratio. This can be discovered through your account History with the bank. That is why the bank will tell you that you must maintain your account with them for at least three months before you can apply for a loan, some will even say six months. I think this is the common mistake a lot of people make- they go to the bank with a very profitable business plan, open a current account and submit an application for loan that same day. The bank must know your financial strength before they can give any thing to you.

WOW, I think I have to stop here but this is not all about it. Guess what? What you have just read is a summary of my 42 page book: BUSINESS FINANCING: from idea to ideal.
I have answered your questions in that book in full detail.
Go To www.geocities.com/bizforceng to read more about my book.