Why would a banker take the time to gather all your information and put you through the system? Here’s why…they work on commission! It’s as simple as that. They are commissioned sales people just like any other sales rep.

Does the banker really underwrite your file and make the decision? NO. The computer does. Regardless of your intentions, the computer cares about your credit score and a few other variables. You could have the next FaceBook or Google, but if your score isn’t up to par, the chances of pulling down credit are just not that good. You could be full of passion (in my opinion, this is as important and credit history), but again, if you don’t have the score, your chances are…well, you get my point.

I think it’s amusing at times to see bankers who act like they are giving you their full attention and “will see what (they) can do.”. Do you really think that giving the banker your Business Plan is going to help your case? Unfortunately, the answer is NO. Unless you are looking for a Large loan, you don’t ever need a biz plan when you apply for under 100K at traditional lending institutions. The truth is, you don’t need anything but your credit score. If you have a good credit score, you can get a loan. PERIOD.

Now, is there a solution? Of course there is. It’s called Peer-to-Peer lending or Social Lending. These are platforms that allow the common folk like you and I to lend and/or borrow from other common folks. It takes the power out of the large institutions and puts in right in our lap. We underwrite the files and ultimately, we make the decisions as to who gets funding and who doesn’t. It’s a beautiful thing.

Stay tune for more information on P2P lending. I will direct you to some of the great Social Lending sites so you can try them out for yourself. I have!

Basic financial reporting is not as well known as it should be. In my experience a lot of entrepreneurs only want to know that there is money in the bank. This is as detailed as they get or want to get with their financials – this in understandable. Accounting can be intimidating to some but just because it’s confusing or intimidating, doesn’t mean it’s not important. Businesses need to be accountable.

Poorly-prepared financial statements can’t be used to make decisions. They can’t be used for tax preparation. They can’t be used for budgeting and if they get into the hands of a banker, they won’t help your case when applying for a 50K line of credit.

Having properly prepared financial statements (basic statements – Income Statement & Balance Sheet) will strengthen your access to capital but arguably more importantly than accessing additional capital would be managing your current capital. Accurate financial statements will accomplish both of these goals.