When your business needs a business loan, it can sometimes be difficult to know where to turn.
In a series of articles, our business manager, Jordan Berg, dissects the application process to help give you the best chance for success with your business loan application.
The fourth and final article in this series explores how to prepare your application, how you will be judged, and the process itself.
Putting together your application:
The majority of delays are caused by incomplete documentation. To strengthen your application, have the relevant information ready in advance.
A good starting point would be;
- Accounts – last 3 years of full accounts
- Management Information – Ideally this will cover the period from your last annual accounts up until the time of your application.
- Cashflow – a detailed forecast that covers a minimum period of 12 months.
- 6 months Business Bank statements
Decisions are based on trust and whilst it may be appealing to conceal any detrimental information to a lender, this is really counter intuitive. We would recommend being up front and honest should there be any irregularities in your financials or any challenges the business has faced.
Did the business make a loss one year?
Do you have a poor personal credit score?
Has the business had any bad debts?
These sorts of issues are best flagged ahead of time with an explanation as to why it happened and what steps have been taken to avoid it happening again.
It’s better for a lender to have too much information than too little – you want to make it easy for the lender to say yes!
How will I be judged?
Here are a few things that lenders will consider:
- Business stability and track record of profitability.
- The impact generated by the funding.
- Serviceability – how many times your annual operating profit can make annual repayment totals.
- Creditworthiness – don’t forget to check your own credit report – whilst Personal Guarantees are not being taken under government-backed lending at present, these will show as an indicator of how you manage your own affairs – it is always worth a check to avoid any surprises.
What to expect from the process:
The process can vary from lender to lender. When further information is requested be prompt and cooperative. Seek timescales where possible – it’s been an incredibly busy time for lenders, so ensure there is nothing outstanding your side that could hold up the application.
If you are declined, ask why. This will support you with future requests and help you to understand your weaknesses through the eyes of a lender.
About SWIG Finance
SWIG Finance is the South West’s leading Community Development Financial Institution. We are passionate about bringing social and economic benefits to people and places in the South West.
We do this by providing support and finance to Start Ups and growing SMEs that can create and secure employment opportunities.
As the South West’s leading delivery partner for Start Up Loans UK, we can provide Start Up Loans from £500 – £25,000. For more information visit https://www.swigfinance.co.uk/start-up-loans/
We also have loans from £25,000 to £250,000 available to South West SMEs who cannot access sufficient funding from their bank https://www.swigfinance.co.uk/business-loans/
For an informal discussion about your funding requirements, get in touch with our friendly and professional team to find out how we can help: firstname.lastname@example.org / 01872 227 932.