By Joe Barbera, Managing Director of Liquid Corporate Finance.
One of the questions I am asked the most is "Do you think my finance application will be accepted?"
As positive as I am, I can never give a cast iron guarantee and say yes. However, with over 20 years' experience in asset finance, I can tell you that there are five fundamentals that you can control that will dramatically improve your chances of being approved for business finance:
Application – Accounts – Assurance – Anticipation – Authenticity
1. Application – Register Your Rationale
Why do you want to borrow the money? A clear and well thought through rationale for your application is key. For example, if you are looking to consolidate existing agreements into a more affordable option, what positive effect will that have on cash flow? Alternatively, if the asset you wish to buy is income-generating, show how that income will outweigh the monthly payment. Or, if you are re-financing existing assets to raise working capital, how will that cash injection positively change your business?
2. Accounts – Invest In Success
Lenders will want to see the most up to date financials for any business they deal with. If your accounts are more than 12 months old, supplying management accounts will show the lender how invested you are in running your business efficiently.
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3. Assurance – State Your Case
It's important to stay within your overdraft and avoid returned and unpaid items. An underwriter is looking for a business to demonstrate affordability and the assurance that their loan will be repaid. Bank statements offer a great insight into how a business manages its cashflow and a well-managed bank account could be the difference between an offer – or a decline.
4. Anticipation – Demonstrate Cashflow Confidence
Businesses should keep a cashflow forecast as a matter of course. As well as enabling you to manage the company’s finances more effectively, it can also allow you to spot any cashflow issues well before the cash starts to run out. This can be hugely beneficial, especially when applying for a larger facility, as it allows you to demonstrate to an underwriter exactly where the money will be going and how it will improve your business’ position.
5. Authenticity – Determine Your Disclosure
Nothing will alert an underwriter more than any adverse information that hasn’t been disclosed at the point of application. Be completely open if there are any credit issues with either the director(s) or the business. Explain what the issues are and, most importantly, how you are trying to rectify them. For finance brokers like myself full disclosure will determine which lender I apply to. Certain lenders will fund clients with adverse, however, other lenders such as banks will be reluctant to do so.
Follow these Insider Finance Tips and you will be well on your way to securing the finance you need for your growth and expansion.
If you would like to discuss how Liquid Corporate Finance can help you secure business- critical finance, call Joe Barbera today on 0333 772 1782 or email joebarbera@liquidcf.co.uk.
