Many businesses need outside finance at some point in their development. Applying for business finance takes a bit more time and information than a home loan, as each business’ needs are different. This guide outlines what your bank is looking for when considering your application for finance.
What will a Business Banking Manager look for?
When assessing your finance application, your Business Banking Manager will look to identify how your business will be successful, what profit it will generate, and whether it is able to meet your proposed loan repayments.
The first step – talk to us
In the early stages of evaluating whether you can purchase a business or borrow funds for another reason, you probably won’t have all the information you need to put a full proposal to the bank. At this stage it’s good to discuss financing options with your Business Banking Manager.
They will need an idea of the following:
- The purchase or set up cost (including any additional plant or stock and GST if applicable)
- How much you want to borrow
- How much you will contribute yourself
- Security available for the loan
- Business profit available to service the proposed loan
- Any existing debt and any other income sources.
It’s best to come and talk to your Business Banking Manager early. They will be able to let you know if your proposal is likely to succeed, or help you restructure your initial plans into a more bankable proposition. Your Business Banking Manager can also suggest professionals and advisors who can help you with some of the details.
They can provide you with forms and planning guidelines that will help you prepare your formal request for finance.
What you need to do
You will need to provide your Business Banking Manager with hard facts and business projections, usually prepared with your own accountant. Your Business Banking Manager will want to clarify the details in person. The more research you have done at this stage, the better prepared you will be to answer any such questions. However, if you are not sure of something, say so, and then try to find out the answer.
It is important to develop a partnership with your Business Banking Manager and other professional advisors as early as possible. Keep each other informed and recognise each other’s needs. This will mean you will get your answers as soon as possible.