Being in the financial industry for over twenty years, I have frequently heard many people say that it is impossible to get a mortgage when you are self-employed. Frankly, I have heard that it is impossible to get financing period once you are self-employed.
Once believed, this myth can cost your financial future. Not many businesses can reach the next level of growth without financing.
So how can you, as a self-employed individual, ensure you can be approved once you seek financing? Let us look at the below top 5 ways:-
- Keep accurate records—I’m sorry, but there isn’t any way around it: You need to hire a financial accountant. You need to budget for one to ensure that s/he records your revenue and expenses properly. Your financial institution will require you to see dated and projected financial statements. You are viewed much more favorably when approaching the bank with professionally prepared financial statements.
- Qualified & Competent Financial Accountant—There are a number of Financial Accountants out there, but few understand what Banks look for when reviewing your financial statements. Ensure you do not have just a bookkeeper but someone who appreciates your long-term financial goals and can work with you to achieve them.
- Open a separate Bank Account—You need a separate Bank Account to record your transactions. Separating your transactions improves revenue recording and helps the Bank analyze your revenue potential much more easily.
- Record ALL transactions in your Bank Account – Even if you are a cash business, you must ensure that all your revenue potential is recorded in your bank account. Even if you deposit the cash in the morning and withdraw it in the evening, you must record the revenue earned via a bank deposit.
- Save for Your Injection – What is an injection? It’s the amount of money you will be injecting into the loan. Since not all Banks offer 100% financing you will need to save for your injection. You also need to have savings to cover any legal fees. Speak to your current Bank to understand their minimum injection requirements for their loans. Too often, you are working with a Bank which, by their terms and conditions for their loans, you would never qualify for a loan.
If you found this article useful and need any guidance, please contact me directly.
Until next time LinkedIn family – take care!
If you have any questions please do not hesitate to contact us at support@afbconsultingservices.com