Getting a bank loan approved is not the easiest process. However, the current economic situation and increasing loan defaults means that lenders are even more cautious in advancing credit. This has also had a knock-on effect in raising the cost of credit. Presenting the ‘perfect package’ for appraisal is therefore crucial if you are to obtain a favourable bank loan.
Let’s check out 5 things that can help you prepare the ‘perfect package’.
Be certain of what you need
What type of financing do you require and how much? If you are looking to finance an asset purchase for instance, will you require additional working capital to maximise the asset? You also need to look at what rates you can realistically afford and your plan for paying off the facility as quickly as possible. Thinking through and documenting these considerations will help you present a better case for financing.
Do your research
When you want a loan, don’t just go with your bank. Shop around other banks and even non-bank financial institutions to see what the competition is offering. It is quite rare to find loan packages online in Ghana so talk to loan officers in different financial institutions and see what concessions you could wring. If you eventually decide to go with your bank, having this information puts you in a stronger bargaining position to negotiate favourable loan terms.
Plan the entire process
Planning ahead for a facility is a must. Create a checklist to help you gather the information that the bank requires as incomplete applications are almost certain to be refused. Bills of laden / pro-forma invoices, significant contracts, financial statements, guarantor’s letter and bank statements, director’s ID cards, regulator’s certificate (where applicable) etc are some of the documents banks in Ghana will request for.
Have realistic expectations
Obtaining credit takes time as there is a process the bank must go through. Being in a hurry when looking for a loan is therefore not a good idea – you might even set off the credit officers’ risk antenna. Also, while it is important not to be underfunded, do not apply for more funds than you need because you will need to justify the amount. Ask the relationship or loan officer questions about the entire process and their recommendations for follow-up. That should inform you about when an answer should be expected.
Build good credit history
This might not be an immediate option for most people. Nevertheless it is quite important to highlight because while relatively new to Ghana, credit reference bureaus have been operating in Ghana since 2009. It is important to dutifully service any loans you take / have taken so that you maintain a good credit score. If an instalment payment must be missed, engage with your bank and agree on a plan so as not to compromise your credit history.