Most of us feel upset when we are refused what we ask for. This starts from childhood and continues all through life. Children throw tantrums if adults refuse to give in to their demands, but adults cannot indulge in that kind of behavior (of course, some adults do behave like children and get angry and hysterical but we are not talking about them here).

When adults are faced with a situation when they are refused a request or a demand, the  best thing is to try and get it in another way. If they give up then the chances of getting anything are zero. If they demand or ask for things in an inappropriate way they will still get refused. This is true of anyone in any field. In such instances, people have to learn the art of convincing the other person to listen to and accede to their demand or request.

Loans for business needs

One of the main things that entrepreneurs need is money or capital to start their business and for operations after that. They often have to take loans for their needs. At times these are not readily available and their applications are rejected. But it is only when they keep trying that they finally get the money. Perseverance and determination and the right way of convincing gets them what they want.

Why are they refused initially? The reasons are many. They may have applied to the wrong loan agency or bank. Their application has to be in sync with the areas the agency /bank have identified for giving loans to. So the entrepreneur needs to widen his net, do proper research and background check on the various agencies and then apply to one where they are likely to get heard.

Background check on the applicant

When deciding who to give money to, banks and loan agencies also do a background check on the applicant – this is done very diligently because their money is at risk. If the applicant is found to have a history of not honouring their financial commitments viz, not   back earlier loans, not paying employees on time, not paying their other creditors, having any kind of negative rating where finances are concerned, then their application is likely to get rejected. So the trick is to be financially ethical.

Entrepreneurs also need to maintain proper books of accounts and have to show that they have sufficient funds to pay for regular payments like salaries, rent and other monthly expenses and have some balance for contingencies. If this is not so, the agencies and banks put it down as a negative and this adversely affects the probability of loan approval.

Well thought out business plan

Entrepreneurs have to have a definite, well thought out business plan that can convince the agencies/banks that their business is worth investing in. They have to clearly indicate how the money will be used , what are the ways they hope to generate revenues, how this revenue will be deployed and how the loan will be repaid.

Even with all these in place the lending institution can still not be certain that their money will not be at risk. They have to safeguard what they are lending. For this, the borrower entrepreneur has to show that he has the capability to give back an equivalent of what he has borrowed in the event that his business collapses or fails to take off. For this they are usually required to put up something as a guarantee – this could be their assets which are nor associated with the business they are trying to borrow money for – could be land, car, other business interests (e.g. factory of a successful business etc).

So if as an entrepreneur, you need to borrow capital, go about it the “right way” and then you can convince the lending agency to listen to you and give you what you want.