Applying for Finance

Key Points in Preparation
After completing your business plan and cash flow etc, review all of your finance sources to determine the best arrangement for you. It may be possible to preserve your capital by borrowing sufficient funds.

Beware of carelessness when funds are readily available. Remember: "a fool and his money are soon parted".

The Applicant
The lender will be very interested in the applicant’s profile and will be looking for strengths/weaknesses an past business performance as relevant to the project. The lender will have to be confident that the applicant has the skills and ability to ensure the success of the project which must be capable of repaying the loan and interest.

The Business/Project
Describe the business or project in some detail: make certain the lender understands precisely the nature of the business and the reasons for the loan. Information extracted from IBIS Business Information Service can be useful from an industry viewpoint, in providing a broad overview including forward projections and comments about barriers to entry and current industry conditions and opportunities. IBIS is a database of industries analysis and is available in read only form in the Corporation’s Business Information and Licence Centre.

The Feasibility/Marketing Strategy
This probably is the most difficult section to complete satisfactorily. Provide quality data, because unsubstantiated estimates and guestimates do not inspire confidence in a lender. Flawed feasibility data will produce flawed financial s which are of no use to anyone.

The Financials
If appropriate, include historical information relative to past performance; principally Trading Profit and Loss Statements. For new businesses, show all forward estimates including cash flow statements, budgets and breakeven analysis. The projections are probably best presented on a three scenario basis, best case, worst case, and something in between.

The Loan and Payment Details
Specify precisely the amount required, no more, no less, just the amount required to achieve the objectives of the project. The type and mix of finance should be specified, e.g. overdraft, fully drawn advance, fixed term loan, etc. Indicate your capacity to repay the loan and interest. If you intend to operate from rented premises advise the lender of the term of the lease as this will impact on the term of the loan.

Do not underestimate what you want to borrow. Lenders lose confidence when you have to return for an extra amount which you have "overlooked" in your original financial analysis.

Security
Finally, provide full details of available securities, including encumbrances that may be currently attaching to the title (if real estate is the proposed security). Provide details of any insurances, life disability, etc. available in the event of the death or disability of any key people.

By following this suggested format for a finance proposal, the chances of obtaining the required funds will be immeasurably improved.