The banking market has changed dramatically over the last 4 years. Bank lending criteria has become harder to meet, conditions tougher and banks have become more selective. They only choose the profitable businesses to support.
On the plus side more innovative lenders have entered the market to challenge what was always considered the High Street banks domain. Some of these are exceptional in what they deliver and only available via the NACFB (National Association of Commercial Finance Brokers) broker market.
So if you have the need to raise finance to help your business grow then give yourself the best possible chance of succeeding.
- Plan ahead – a typical lending proposal for a business takes 2-3 months from start to finish.
- Ensure your basics are sound. Have up to date financial information available including the last 3 years accounts and current management accounts (your accountant can help you with these).
- Understand your financial information. It’s no good producing accounts if you cannot interpret these.
- Ensure you research the market rather than just approaching your own bank. This can be achieved by employing professionals such as a NACFB member who will be independent and has access to the whole market or of course your accountant.
- Quantify the amount required by providing estimates/quotes or examples of the expenditure.
- What impact is this expenditure going to have on the sales and more importantly the Net Profit of the business and can the business afford the repayments?
- Consider the What Ifs? And provide mitigation of these. E.g. what if sales are not achieved at the level predicted? What is the Net profit is not as high? What if interest rates increase?
Having considered all of the above your chance of getting finance will have improved.