Applying for equipment finance or a working capital loan shouldn’t be the same as going to a blind date when you’re just telling the other person the best things about yourself and skipping less stars. The analogy of the application process should be more like running to public offices where everything hidden in those cabinets goes away. It makes sense to put all the cards on the table because a late discovery of a tax lien or default, even if it was years ago, can ruin your chances of getting approved. It can also reduce your chances of working with that financial agent again.
So, in order to avoid wasting your time and your lender’s time, disclose anything negative when applying for business finance. If possible, provide explanations with information on those events; a medical problem or a key customer retiring can be serious reasons your business has plummeted and can sometimes be overcome with approval. If you have the documents; letters, statements, etc. that support your explanation, then it will increase your chances of being clear about negative events. At the very least, it will show effort and create a part of your “character” that many applicants underestimate. Remember, this is people’s business and perception still adds to the equation.
In cases where the negatives are so significant that they cannot be resolved, it is better to know sooner rather than later to save time and effort to initiate Plan B. There is always a Plan B, which involves using higher-risk lenders who specialize in validating clients with mild or severe credit problems. If a higher-risk lender’s offer is unacceptable, you can still choose to reject it at no cost to you except time and effort.
In business, as in many other areas of life, the goal is to get positive quickly and efficiently. The sooner you know if your equipment acquisition or expansion can be approved, the sooner you can move on to other business success strategies. We know the pain point of many companies is going through a paperwork process that is largely unavoidable, but if you have shared problems in the past, many financial agents can review your profile without having to borrow or detail financial package before you have a good idea whether approved or not. That way, if you have to go through the mixing of the paper, you will know that it is pointing towards the expected validation.