How to Make Banks Want to Loan You Money

A power strategy from the pages of George H. Ross’s book, Trump Strategies for Real Estate

George Ross, Senior Counsel for The Trump Organization, is a formidable negotiator and businessman. In his book Trump Strategies for Real Estate, he sets out this simple strategy that can actually make banks eager to lend you money, whether you are buying a building or funding a business.

Entrepreneurs and real estate investors usually don’t apply for loans until they are already involved in a deal of some kind. Since they need funding fast, they walk into a bank, meet with a loan officer they have never seen before, and things don’t work out so well.

There is a better way. Let me explain a simple method of establishing credit that you can use to great advantage. The technique takes a little time, but I have seen it work beautifully.

Go to a bank and ask to borrow $10,000. When the loan officer asks why you need money, simply say that you want to have it on hand so that you can act quickly when an opportunity presents itself.

Have a financial statement prepared, because the loan officer will ask for it. On it, to the extent that you can, list some assets that can be reduced to cash, such as stocks, bonds, or the surrender value of insurance policies. Offer these assets as security for the loan, even though their value will far exceed the amount you are asking for. This should convince the lender to write the loan - happily. 

Your strategy is to borrow that $10,000, pay it back, then borrow $25,000 and pay that back, and then possibly borrow $50,000 and pay that back ... and so on, as your situation, needs and finances dictate. Your goal is to establish a perfect payment record.

At the outset, this strategy will cost you money, because you are paying interest. But remember that if you put the money you borrow in an account where it will earn interest, you will only be paying the difference between the interest on the loan and the interest you are earning on the money.

If you keep increasing the loan amounts, make all payments on time (and if your financial statement remains sound for as long as you implement the strategy) your bank will then be willing to write you a sizable loan at the time when you really need it.

This plan might require banks to violate their normal lending policies. But banks violate those policies all the time for their good customers, meaning customers with whom they have established solid relationships. Through the process I outline for you here, the bank will have come to trust your judgment and credit trustworthiness, based on your track record. The result? You can get a loan, and often quite a large one, without having to go through the typical inquisition that most first-time loan applicants face.

Banks bend over backwards not to lose good borrowers who have established a proven track record.

And another strategy . . .

Don’t hesitate to ask your bank for more favorable terms on your loan while you are paying it back, based on your excellent repayment record. If you get turned down, ask to speak to your loan officer’s boss. If that doesn’t work, say that you are considering taking your account to another bank that is more flexible.

Responsible borrowers are golden assets to any lending institution. The strategy I lay out for you this morning, simple as it is, will help you join their select company.