Big Ideas

Business Loans - How to Apply

Business Loans - How to Apply

13 September 2018

Financing your business with a bank loan is one of many funding options available to small and medium businesses.  

Your aim may be to kickstart your business, leap to a new level, fund research & development, or to provide a comfort buffer while you change directions. Whatever the purpose, it is important that you understand how much cash is required to execute your plan and vital that you can access it.

Below are our tips to help you make your loan application successful. 

 Be prepared 

You should see meeting your bank as an opportunity rather than something to fear – a lot of the time they’ll help you with some ideas and helpful feedback. The bank is likely to be interested in your business and will want your application to succeed. After all, successful businesses are a source of quality revenue for the bank.   

Don’t rush it though. First impressions count and, despite a mutual will to succeed, securing a loan from a bank requires more than just strolling into your local branch and asking. Your chances will improve if you present a compelling business plan, know why you need the loan, know where and how you’ll invest the money, and are able to show that you can pay the loan back. 

 A compelling business case

String it all together and paint them a picture. Banks are experts in money but they’re not necessarily knowledgeable about your area of business. Remember to present a sharp and precise story to illustrate how the loan will unlock business growth. Your business plan should include a forecast profit & loss, balance sheet and cash-flow and demonstrate how the bank loan will be paid back. 

 Build a relationship

In our experience, it is important to find the right banker to work with – and this should trump small differences in rates. If you can find someone that you have a bit of chemistry with, is knowledgeable about your industry and interested in your business then you are more likely to be successful. There are many different services that your bank can offer and investing in the relationship can help you access these. It may also prove vital in times of difficulty or urgency. 

 What you’ll need

 When applying for a business loan, ensure you have: 

  • financial statements for the past two years 

  • Year to date (current) management reports

  • a robust cash-flow forecast 

  • business or project plans  plans to show the direction your business is taking

  • tax returns to verify your income

  • bank accounts, also for verification.

If you’re new to business and don’t have historical documents then your lending options may be more limited. This alone shouldn’t stop you from borrowing, but make sure you understand what you are signing up to, especially where personal assets are provided as security. 

Cloud based accounting software enables your accountant to prepare financial reports and produce the required information more quickly. Your lenders (and investors) love timely information and they also value robust processes, so if you are using cloud based solutions such as Xero or QuickBooks then you’re likely off to a great start. 

Need some help with your loan application, guidance around cash-flow, or an advisor to front the bank meeting with you? Call Engeneo today!

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