Are you about applying for a loan from a foreign bank as a small business owner or startup entrepreneur? If YES, here are 7 easy steps to get a foreign bank loan guaranteed. One of the things that make a business run effectively is the availability of funds.
To a very large extent, funding is very vital for any business. As a businessman or woman, there will be a point in time where you would need business loan and in some cases the loan might be from a foreign bank especially if you are an international business person.
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Why Apply for a Business Loan from a Foreign Bank?
The truth is that there are international contracts that need international loans to execute them hence the need for banks to make available loans for foreign businesses.
A foreign business loan is defined as a viable funding option for a business from a foreign bank or financial lending house especially if they have overseas connections or if they are expected to execute a project in the countries where the foreign banks or financial lending houses have strong presence.
The fact that foreign banks are usually represented in the united states makes it easier for businesses in US to access foreign business loans. Foreign banks are represented in one of four ways in the United States. The banking entity may be a branch, an agency, an international banking facility or a foreign owned bank.
A large percentage of foreign banks can be found in 3 states: California, Illinois and New York. No doubt, the physical location of a lending institution is not as important as it was several decades ago due to electronic banking and online services.
If you own a business and you want to access foreign loans for your business, here are some simple guidelines that you are expected to follow; Here are some of the steps that you are expected to follow if you want to apply and get a business loan from a foreign bank;
How to Apply and Get a Business Loan from a Foreign Bank
1. Read the Business Loan Requirements
If you are applying for a foreign loan as a business that is operating in the United States, one of the first steps you need to take if you are certain that foreign business loan is the way to go is to ensure that you read up all the requirements for a foreign company seeking loan from a foreign bank or financial lending institution.
You need to ensure that you select the foreign banks or financial lending institutions you want to get business loan from and then read up all you can from their official website or call them to get firsthand information of all that is required from you to access their business loan as a foreign company. With that, you will be bettered prepared to apply for the business loan and the chances of your application getting thrown out will be reduced.
If you are through with your findings and you have been able to pencil down one or more foreign banks and financial lending institutions that you are qualified to get foreign business loans from, the next step for you is to gather all the required documents as stipulated in their website, prepare the business loan application and ensure you meet the expected standard.
Some of the common documents that are expected from you when you apply for business loans are a strong statement stating why you need a foreign business loan, certificate of incorporation, your tax clearance, your financial statements and of course your business plan.
As a matter of fact, your business plan should include the management cum business owners’ resumes, financial results and projections (Profit & Loss, Balance Sheet and Cash Flow Statements), and personal financial information including three years of tax returns.
3. Submit Your Application
After carrying out your due diligence and properly packaging your business loan application, you now have to submit the loan application. You can choose a reliable courier company to help you deliver your application. Just ensure that you get a contact person from the bank or financial institution.
The truth is that you need to constantly stay in touch so as to know when the loan will be approved and how much will be approved. This is necessary because the fact that you are qualified for a business loan as a foreign company does not stand as a guarantee that the loan will be granted to you. In some instances, you might have to lobby to get the exact amount that you applied for.
Guidelines for Loan Application to a Foreign Bank
a. Your Business Must Be Duly Registered and Qualified for Foreign Loans
Of course it is not every business that can access foreign loans and there are levels of foreign loans that can be accessed by businesses. For example, you must have grown to a conglomerate or corporation for you to be able to access loans from the World Bank.
The fact that World Bank gives out loans to businesses to execute international projects does not make every business qualify for such loans. In essence, the status of your business is part of what will determine if you are qualified for a foreign loan or not.
Note that lenders will access your credit score and your debt to income ratio to determine if you are qualified for the business loan. A credit score of above 650-700 is considered acceptable, but does not guarantee a loan. Most lenders will look for a credit score that is at least within the range of 700 to 800 and your personal debt payments should not be more than 33 percent of gross monthly income.
So also, the duration of your business will go a long way to determine if you are qualified for a business loan as a foreign company. The fact is that foreign lenders give unsecured working capital lines and term loans to businesses which are over 2 years old and have a reliable record of incoming accounts receivables.
b. Your Business Must Have Standard Financial Reports
Let us get straight here; if you are just starting out in business, you are definitely not qualified for a foreign business loan. This is so because before any bank or financial institution can grant you loan as a foreign company, they would want to see your financial statement and your volume of business transaction for a period of time.
This will enable them access the risk of granting your company business loan.
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