Few of us (probably none of us) want to sabotage out chances of getting a small business loan, but that unfortunately is what many small businesses do. Here are the top five ways that they do them. Hopefully this list will help other make better decisions and avoid inadvertently compromising their own future.
- Prove that you are bad with money. Banks prefer to lend to people who are good with money—mainly because money management is such an important part of running a small business. Therefore, the best way to avoid getting that loan that you need is by showing them that you couldn’t manage money if it rolled over and played dead for you. You can do this with repeated overdrafts, consistently low balances, and a low credit score. This alone may be enough to sabotage your small business loan, but there are four more tips for those of you who need them.
- Fail to communicate. Successful entrepreneurs are usually good communicators, so failing to communicate may also help you sabotage your small business loan. Don’t return calls, turn your internet off altogether, and keep all needful documents anywhere but where you need them. If you miss a projected milestone or even a payment on a loan, avoid them even more strenuously. Banks like to deal with people who keep them appraised of their financial state, so avoid this as much as possible. Similarly, a failure to form a relationship with your banker can be a great way to sabotage your chances of getting a loan. Having someone who believes in you, has a history of dealing with you, and also knows the small business world in general can be a huge advantage—one that you don’t need if you are trying to sabotage that small business loan.
- Give them as little information as possible. Things like business plans, resumes with your credentials, and other similar documents are none of their business, right? No one has the right to ask for your personal information, even a financial institution that is considering making a sizeable investment in your future. If they ask, get testy and refuse in the rudest way possible. Better yet, tell them that these documents don’t even exist.
- Have no collateral. One of way of showing you are completely unworthy of a small business loan is by not having any other property to show for yourself. If you have no house, no car, and no property beyond a pup tent and a cat, tell your bank loan officer that as soon as possible. They’ll make sure you don’t get that loan you are trying so hard to avoid.
- Refuse to invest your own capital. After all, this would show that you are confident in your business’s chance of success. We all hear about people who make it big with no collateral of their own. Hold out for this type of situation, even if it means sabotaging your chance of getting a small business loan.