Seeking finance to expand or start your business is an exciting step, and like all business owners, Elkins Finance is aware of the importance of getting this step right. The ute pictured is a recent business equipment addition for us. (The dog we already had)
Preparing a detailed business plan will inform the lender about your business proposal so that they can assess your application as favourably as possible.
1. Know your numbers. In order to inspire confidence in you as a borrower, it’s important you are familiar with your key financial figures, even if you don’t prepare your own financial statements. This includes current income, net profit and expenditure.
Include a profit and loss budget, and, if your business is new or you are starting a new business, prepare your personal credit history.
2. Estimate how much funding you need. Are you looking for funds to help with cash flow and operations on a regular basis, with a larger overdraft limit for occasional use? Or do you need one-off funds to open a new branch or purchase additional equipment?
Prepare an updated business plan to establish all of the factors in your application, including any partners and strategies.
3. Project your cash flow. You can use this to prepare pro-forma statements, or projections of what your business will make going forward, making adjustments based on past trends.
4. Provide proof of loan security. A lender will evaluate your risk factors to determine if you and your business are a good investment. Consider the maximum payment you can afford before meeting with your credit adviser, who can advise you on whether you should offer collateral (assets such as property to secure your loan) or a third party willing to guarantee the loan on your behalf.
5. Ask questions. Your credit adviser will shop around on your behalf to find out what products are on offer. If you’re already a customer with one lender, discounts may be available. If one option is much cheaper, your credit adviser will be able to tell you whether it carries higher fees fees or a likelihood of the interest rate changing. Our panel of lenders also have different requirements in the paperwork you need to produce. That may influence the best fit for you.
Elkins Finance is a MFAA Approved Credit Adviser and available to talk you through your business finance options if you are interested after reading this article, or know someone who would benefit. Call 1300 355 467 or use the contact us form to request we contact you.