Applying for funding from a bank can be daunting. It’s a lengthy process which involves jumping through hoop after hoop with no guarantee of success.
But it doesn’t have to be that way, follow our guide to ensure you go into the loan process with the correct information and watch your chances of approval soar.
Prepare a cash flow forecast, and back it up with historical financial statements.
Make sure the information you are providing is as high quality and detailed as possible, you want to show an in depth knowledge of your cash inflows and outflows and a good prediction of your future bank balance.
Present yourself and your business well, this will also be reflected in your plans for any funding you receive.
Bank managers will often look for evidence of good character when assessing loan applications, this is done through the use of references and by analyzing your track record. It is important to note that when you’re applying for a loan everything from your education to past business ventures can (and will) be under scrutiny.
Produce a detailed (good) credit history.
This will show your ability to pay back loans, both your business credit and personal credit will be scrutinised, if you anticipate trying for a loan then start building up your credit score in advance. To build credit you should spend under your limit, pay on time and keep your credit accounts open.
Show a track record of good money management.
Show that you can set budgets, track performance and cut back where you need to in order to reign in your finances. Having a track record for spending on unnecessary things won’t help you secure a loan, but regularly reassessing your spending will show that you are actively considering your outgoings.
Demonstrate that you’ve been able to successfully overcome problems that your business has faced.
This will reinforce your ability to repay your debts. Banks look out for good management when granting loans and if you can show good knowledge and control of your business then this will work in your favour.
Show a good knowledge of your industry and the problems faced by it.
Being aware of the problems that could face your industry means knowing about the impact of new technology, the social economic climate and being aware of new trends that could affect business.
Are you looking to forecast when you might need a cash injection? Check out Float Cash Flow Forecasting!