Most business loans will be rejected due to a company’s apparent inability to repay the loan, or a previous poor credit record. Therefore, prior to applying for commercial finance, take some time to make sure that your business plan and forecasts are accurate and portray a realistic view of your company.
If you do have a poor credit history, be honest about it and provide details of what happened and the action that you have taken to correct it. That said, there are other ways that you can maximise the chances of being granted finance:
Your track record
The lender will look at your company and how it has performed in the past. This will include looking at its financial history and credit rating. As such, take action to correct any inaccuracies before applying for finance. If your firm has made mistakes in the past, be ready to demonstrate how you will avoid repeating those errors.
Business plan
Create a strategy that outlines the short and long-term ambitions for the company. State what your targets are and how you intend to achieve them, along with giving details of current performance and activity. Also, produce reports that demonstrate current performance against targets and potential revenues.
Be clear about finance
Know your numbers inside and out. Luckily, if you have outsourced to an accountancy service, you will have all the relevant financial information to hand, including financial reports and plans for the future. Tell the lender what the money is needed for and how it will be utilised. Produce a detailed plan of how the repayments will be made, including the required amount and the proposed term.
Honesty always pays
Be honest about your circumstances. Make sure you are applying for a sufficient amount, as having to request a further amount will demonstrate that you were incorrect in your projections during the initial loan application. Meanwhile, be open and honest about revenues and expenditure, including your own salary or the amount required for living expenses. If you have a problem or have made errors previously, talk about them and don’t try to cover them up. If you are found to be dishonest at a later date, you will potentially damage your chances of securing finance.
Ask for feedback
If you are turned down for finance, ask why. You may be able to put things right before applying to another lender.
If you want any more information about applying for finance or accounting assistance, please call us right now.