Accessing the necessary finance can be a problem for a small company, especially if the business is relatively new. Funding is essential for expanding operations, especially when it comes to exporting, but securing adequate finance can be tricky.
There are some things you can do to build credibility and improve your chances of securing cash for your small enterprise:
Make sure you have a business plan in place that outlines your current status and financial projections. In the plan, give reasons why you require the loan and how the money will be utilised. Provide details of the loan amount that is required, and demonstrate how the finance will be repaid. A comprehensive business plan will include cost-saving tactics and measures that will be put in place in a weak economy. Provide as much information as possible, so that the potential lender can be sure they will recoup their investment in your business
Lenders will usually request financial statements for at least the previous 12 months of trading. If you outsource management accounting services, you will be able to provide a detailed outline of your finances, indicating that you regularly monitor spending and are financially secure
Consider whether or not you have some collateral to offer a lender. If you don’t have a high credit score, a lender may still be happy to provide finance for a company that has collateral. You may be able to pay a small down payment, so that the finance will only be required for a percentage of the costs. You may have a piece of equipment that is valuable, or some other item that could be used
Check your credit report, so that any errors or inaccuracies can be corrected. If you apply and there are incorrect facts on your report, you may find it difficult to obtain credit from any lender. Obtain reports from the main credit reference agencies and make sure that everything is accurate.
If you fail to secure finance from a traditional route, like a bank, consider alternative sources of funding. Although banks are often the first port of call, try family and friends if the amount is relatively modest. If you need to borrow a substantial sum, consider crowdfunding or a grant from the local authorities. Government-backed finance schemes can be obtained, especially by those planning for future growth and development
Securing finance can be difficult at the best of times. If you have experience of obtaining business finance, let us know today.