Steps to apply for business finance

It is very important to be well prepared and professional when applying for bank finance. Providing the following information will help give potential lenders the confidence to support your business with funding.

Business plan

Make sure you have a credible business plan containing well-researched evidence that a market exists for your product or service.

You must document:

  • the history of the business
  • your previous business experience (if you are starting up)
  • how the business’s goals can be achieved
  • market research and contingency plans to compensate for market changes
  • other external factors that could affect the business.

Include these further details for lenders:

  • the amount of funds required
  • the purpose for the funding
  • preferred repayment terms
  • security offered for the loan
  • the basis for your estimated sales
  • evidence to confirm your major expense items.

Financial records

Provide detailed financial data in your plan, including:

  • balance sheets
  • profit and loss statements
  • cash flow statements
  • statement of retained earnings
  • tax returns
  • any other relevant information.

If you are a new business, make sure you draft detailed financial projections. It is strongly beneficial to prepare a 3-way forecast, which means an interrelated projection of your business’ Profit and Loss, Balance Sheet and Cash Flow statements. A statement of personal assets and liabilities should identify which of these are in your name exclusively and which are in joint names.

Offering security

Banks are conservative and risk-averse, so you need to make them feel as safe as possible. Include details of security available to back the loan up if necessary, and details of any debt secured by way of mortgage, bill of sale or other means. Lenders are normally reluctant to take third party security from family members, especially if those family members are at an age where there would be difficulty replacing the asset during their working life.

Repayment information

Formulate a clearly defined repayment plan that allows for interest rate rises during the period of the loan to give further confidence to lenders to approve your funding application.

More funding options

Your business may be eligible for financial assistance from the Australian, state or local government. There is a wide range of funding programs to help new and established businesses grow and succeed. Visit the Australian Business Licence and Information Service (ABLIS) for a quick and easy search of available grants. More details on this article and additional free resources can be found in the Business Queensland website.

Remember, every business will have various reasons for sourcing finance and every funding proposal will have its own unique features. Therefore, you should seek professional advice from your finance broker and business advisor before making a financial decision.

At MoneyQuest Teneriffe we are full service finance and mortgage brokers, providing business finance, franchise lending, commercial and residential property mortgage loans, SMSF loans, and car and equipment finance.

Call us on 0417 551 445 for a no obligation appointment to discuss your specific requirements.

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