To get approval
for your small business loan application, you must be able to
meet the lending criteria set down. Some organisations are more
risk averse than others, and will therefore have more stringent
To vastly increase your chances of a successful funding application,
you will need to present the following information:
1. The reason for the loan. The lender will be looking for something
that fits within the normal range and expertise of your business.
The amount may cover a number of items, so you will need to
2. The amount required, and the repayment term of the small
business loan you want. (e.g. $10,000 term 5 years, payable
3. Details of how you will repay the amount borrowed. For example,
“From the increase in profits of reduced running costs of the
4. Details of security you will be able to offer to the lender.
This will act as reassurance for the lender. If you’re not prepared
to put up some aspect of security, then why should they?
5. You will need to include your business plan which will serve
to answer essential questions relating to management capabilities,
information about the market you operate in. What kind of business
you are in etc.
6. 3 Years financial statements. You will need to present quality
financial information from your accounting software, preferably
signed off by your accountant or tax advisor.
7. Latest Set of Management accounts. Again produced from your
8. Accounts receivables (debtors) and payables (creditors) ageing
9. Principals financial statements. – Particularly required
if some form of security is necessary.
If you are a new company, the emphasis is going to be on your
business plan , and the security (also called collateral) you
or your business can provide against the loan.
You must take the time to practice presenting your case to the
bank or lender to iron out any glitches. Practice on your colleagues
and family (you never know, they might be so impressed, they'll
invest or lend!). It may help to role play the lender and come
up with as many pointy questions as possible. The more time
you take the better your chances will be. (But remember, don’t
fall into the analysis paralysis trap!)
About the author:
Neil Best is an accountant with over 15 years experience in
business finance. This article and other useful business finance
information such as making effective business plans and sourcing
and applying for business grants can be found at http://www.smallbusinessfinancetips.com/small-business-loans.html
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