Practical tips to improve your chances of getting business finance
If you have decided you want to apply for business finance, it’s essential to have all the necessary information ready for the application. The more organised your documents are, the greater your chances of successfully obtaining the business funding you need.
Think about :
- What funds you require, are you starting a business, need help with day to day cashflow or wanting to invest in your business to grow.
- How much cash do you think you will need, do you have any other sources of cash such as savings or investors, and therefore how much do you need to borrow.
- How will you repay the loan, can you demonstrate that this will be from the extra profit the business will make after the investment of cash.
- Do you have any other borrowings or debts, or any other sources of income you can use to repay the loan?
- Are you able to get all the required information together, do you need help?
How much do you need to borrow?
You will need to demonstrate how you have come up with the amount you are requesting to borrow. The lender will need to be confident that you know your figures and that the amount of cash that you are asking to borrow will be sufficient and that you will not run out of money and have to seek more finance in the near future.
How will you repay the loan?
It is essential to show the lender that you can service whatever loan you are granted and you will not default on the loan.
In proving your finance worthiness, you may be asked for:
- A Business Plan.
- Up to date Management Accounts.
- A Cash Flow forecast.
- A personal credit check or personal guarantee.
It’s important to demonstrate that your business will make enough cash to cover your outgoings and make a profit.
A good Business Plan will include:
- Profit and Loss and Balance Sheet projections.
- Detailed cash flow forecasts.
- Financial commentary, including how you believe sales are achievable, what are your margins, and what key purchases or overheads are required to increase sales.
If you have an or buying an existing business you may also need:
- Prior year Accounts – usually a minimum of 2 years.
- Management Accounts for the current period.
- Accountant Reference.
Other details about your business
You will want to include a Business Commentary within your Business Plan, this should include information such as:
- What is the business structure; are you a Sole Trader or Partnership or have you incorporated and formed a Limited Company?
- Who are the owners of the business?
- Do you work in the business full time, do you have any other business ventures?
- What is your management structure?
- What you’re selling, providing, or producing?
- Where is your market; are you online or a physical location?
- Who are your competitors and what other market research you have carried out?
- What is your marketing strategy?
The more detail you can include will give the lender confidence that you know your business and have researched thoroughly.
Contact your chosen Lender, whether this is in the branch, online, or via a broker.
If you would like assistance with preparing a Business Plan or with accounts, forecasts, or projections, please contact us and we will help you to secure the funding you need.