BUSINESS
Deciding to take out a loan is a big step for any business, whether you’re just starting up or setting your sights on growth for your existing business.
HOW TO PREPARE FOR A FINANCE APPLICATION You might be considering finance to kickstart your new business. Alternatively, you might be looking to support your already established business, such as through investment in business assets, or expanding your operations or team, or as a buffer against shortfalls in cashflow. When applying for business finance, it’s helpful to know beforehand what you can expect to be asked for from your lender, so that you can begin to gather evidence for a strong application. By preparing in advance, you are not only increasing your chances of securing finance; but you are also heading off any potential hiccups in good time, which avoids delays, as well as making the whole process a less stressful one for you. There are a vast number of options to choose from when it comes to finance providers. Business finance is available from a number of different institutions, from household name high street banks to lenders with an alternative approach, like Community Development Finance Institutions and Peer-to-Peer platforms. The latter can offer competitive loan amounts and terms to business. Each lender will have a different application procedure, requiring different information from you.
46
Due to the variety of options available to businesses, one of the first things to consider before starting your application is deciding which lender is the right fit for your business. Seek out expert advice to ensure that you are applying for the right type of finance. There is a wealth of information out there, from free business support and advice from organisations like Let’s Do Business Finance, to accountants, banks or commercial finance brokers who can provide clarity on what type of finance you need, and the best place to get it from. Whether you’re gearing up to raise finance for a start-up or a growth loan, one thing that many lenders will ask for is a detailed overview of your business in the form of a business plan. Your lender will want to
understand your business – what it is, how it works, who your target market is, and your plans for the short and long term. Your plan should give a comprehensive picture of how, if your application is successful, you will use the finance to achieve your goals, and if you will be able to make the repayments. A business plan, as well as being a key part of your business application, enables lenders to get a real sense of your business, and how viable a business loan will be, as well as give an insight into how much you need to borrow to succeed. It also creates a road map for you as a business, helping you to make sense of your business journey and, in making a plan, help you stick to it. Alongside a business plan, lenders require you to provide the financial history and performance of your business, normally in the form of copies of your financial accounts. For established businesses applying for a growth loan, this is usually spanning back at least the previous two years. For pre-start and start up businesses, this might be similar to the last six months of business bank statements, as well as the last three months of your personal bank statements. Sharing this information enables
