To get approval for your small business
loan application, you must be able to meet
the lending criteria set down. Some organisations
are more risk averse than others, and will
therefore have more stringent criteria.
To vastly increase your chances of a
successful funding application, you will
need to present the following information:
1. The reason for the loan. The lender
will be looking for something that fits
within the normal range and expertise
of your business. The amount may cover
a number of items, so you will need to
cover each.
2. The amount required, and the repayment
term of the small business loan you want.
(e.g. $10,000 term 5 years, payable quarterly).
3. Details of how you will repay the
amount borrowed. For example, “From
the increase in profits of reduced running
costs of the Whizzbang Go4It”
4. Details of security you will be able
to offer to the lender. This will act
as reassurance for the lender. If you’re
not prepared to put up some aspect of
security, then why should they?
5. You will need to include your business
plan which will serve to answer essential
questions relating to management capabilities,
information about the market you operate
in. What kind of business you are in etc.
6. 3 Years financial statements. You
will need to present quality financial
information from your accounting software,
preferably signed off by your accountant
or tax advisor.
7. Latest Set of Management accounts.
Again produced from your accounting software.
8. Accounts receivables (debtors) and
payables (creditors) ageing reports.
9. Principals financial statements.
– Particularly required if some form
of security is necessary.
If you are a new company, the emphasis
is going to be on your business plan ,
and the security (also called collateral)
you or your business can provide against
the loan.
You must take the time to practice presenting
your case to the bank or lender to iron
out any glitches. Practice on your colleagues
and family (you never know, they might
be so impressed, they'll invest or lend!).
It may help to role play the lender and
come up with as many pointy questions
as possible. The more time you take the
better your chances will be. (But remember,
don’t fall into the analysis paralysis
trap!)
Good luck!
This article was written by Neil Best,
an accountant with over 15 years experience
in business finance. The article and other
useful business finance information including
how
to write business plans that get funded
and where to look for business
grants, and how
to approach investors can be found
at.
Small
Business Finance Tips - Small Business
Loans
