Obtaining finance isn’t easy, particularly for a small business or a start-up. However, most companies require an injection of capital to expand and maintain the business, and investment is often sought.
It is possible to improve your chances of a business loan application being accepted by taking some simple steps beforehand:
What will a bank be looking for in a business?
A bank will be looking at cash flow, collateral and credit to calculate whether or not your company is suitable for a bank loan. Make sure you have all the figures at hand to demonstrate that you have a thriving business, based on accurate and up-to-date financial statements. An entrepreneur who attends an interview for a business loan should have all the required data, which includes financial statements, accounts receivables, balance sheet and income statement.
How can you increase the chances of approval?
If you attend your appointment armed with all the required documentation and all relevant financial figures, you will have a better chance of success. Rather than providing estimates, use real-time figures and projections based on actual performance to demonstrate your ability to repay the loan. Although you may need to refer to figures that are written down, take the time to learn the figures and their relevance so that the lender believes you are in control and understand the financial performance of the company.
Produce a business plan
A business plan is crucial when you are applying for finance. This should outline why you want the finance and how it will increase revenues. A solid plan will increase your chances of a loan being granted. Lenders want to know that they will get their investment back and with interest, so a detailed and accurate plan will demonstrate this.
Cash flow
A lender will want to see that your cash flow is healthy and you are able to repay the loan. It may be advisable to improve your cash flow before applying for finance. Make sure you collect all monies due as soon as possible and have a strict credit control procedure in place. In addition to the collection of invoices, try to increase revenues if possible. Tax planning may help to increase cash flow, perhaps taking advantage of tax relief.
If you aren’t sure how to maximise tax benefits, you may want to consult a professional. If you require advice or assistance when applying for finance, give us a call.