A business may require funding at any stage, from first starting up to expansion. It is much more difficult to secure funding now than it once was, which combined with the many options available makes the process far more complicated for a company owner.
Prior to applying for finance, decide which funding option would be the best bet for your company. There are some things you can do to maximise the chances of securing business funding:
Collateral
Having collateral can improve your chances of securing a loan, especially for a new company. Although most lenders would be reluctant to collect collateral unless it becomes a last resort, it will be easier to secure funding if you have security. Collateral can include property, stock, equipment or other assets. Some companies use personal assets, but it’s important to remember they could be at risk if repayments aren’t maintained.
Cash flow
A healthy cash flow demonstrates that you are in control of finances and will be able to pay back the loan. You will have to produce forecasts of cash flow, along with budgets to show that you are able to repay the loan. Excellent credit control also demonstrates the ability to remain solvent. Make sure that you have all the finance reports the lender may require, probably produced by your management accountant.
Current conditions
A lender may want to discuss the state of your specific sector, and consider any risks facing your company. Produce analysis of any developments that could have an effect on your company and the latest trends. Demonstrate how you would deal with any challenges, again using various reports and statements to do this.
Capital
The lender will probably want to compare the amount of funding you require to the amount already invested in the company. If you have invested some of your own cash, or you plan to do so, this may encourage confidence of the viability of the venture.
Character
Approach applying for business finance seriously, so that potential investors will have confidence in your ability. Prepare thoroughly beforehand, with all documents that may be required at your fingertips. Create a comprehensive proposal for the business loan, so that the lender will have all the information to hand.
If you would like some advice on applying for business finance, or simply wish to discuss various types of finance, contact us for an informal chat.