There are many reasons why a business may want to apply for funding, whether the company is in the early stages of development or needs finance to grow. Obtaining finance from a bank or other organisation can be difficult, especially if your company is relatively new and has no track record. There are some circumstances that will result in your company being rejected, many of which you can take steps to avoid.
Why do you need a business loan?
The bank or other lender will want to know what you need the loan for. Prior to submitting the application, be clear about what the money will be used for so that the lender has a clear outline of whether the money is required for a suitable reason. You will also be expected to show calculations of how you arrived at the loan amount. The lender may also want you to state the desired term of the loan, which will demonstrate your ability to pay it back and also show you are applying for the right type. Failure to be clear about the loan requirements could result in a rejection.
Can you repay the loan?
Not demonstrating that the company is able to repay the loan could spell disaster for your business. Your cash flow will be under scrutiny, with the lender wanting to see a healthy cash flow and financial forecasts. If you can demonstrate healthy finances for the last three years, you may have a stronger chance of being approved. A business plan will help you to convince the lender that you have a sound knowledge of your company’s finances and what your long-term goals are. If you are struggling to provide financial forecasts, a business plan or details of assets, you may be viewed as a poor risk.
A professional application
To improve the likelihood of your company being approved for a loan, you could consider outsourcing finance so that you can present the details of your company in a professional manner. Outsourcing finance will ensure that the figures you supply to support your application are based on accurate data, including the forecasts.
A business that can provide details of its history, forecasts and a business plan will have a far greater chance of being approved for a loan. If you have been rejected for finance, contact us today for information.