Getting Loan Application Ready
๐๐จ๐จ๐ค๐ข๐ง๐ ๐ญ๐จ ๐๐ซ๐ข๐ง๐ ๐ข๐ง ๐๐ข๐ง๐๐ง๐๐ ๐ญ๐จ ๐ฒ๐จ๐ฎ๐ซ ๐๐ฎ๐ฌ๐ข๐ง๐๐ฌ๐ฌ ๐ญ๐จ ๐ก๐๐ฅ๐ฉ ๐ฐ๐ข๐ญ๐ก ๐ฐ๐จ๐ซ๐ค๐ข๐ง๐ ๐๐๐ฉ๐ข๐ญ๐๐ฅ, ๐ฌ๐ญ๐จ๐๐ค ๐ฅ๐จ๐๐ง ๐จ๐ซ ๐๐ฎ๐ฌ๐ข๐ง๐๐ฌ๐ฌ ๐๐๐ฏ๐๐ฅ๐จ๐ฉ๐ฆ๐๐ง๐ญ ๐จ๐ฉ๐ฉ๐จ๐ซ๐ญ๐ฎ๐ง๐ข๐ญ๐ฒ? ๐๐จ๐ฎ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ซ๐๐๐ ๐ญ๐ก๐ข๐ฌ.
This post is all about the four most basic yet essential items you need when looking to bring external debt finance into your business. The origins of the word credit can be linked back to the Latin word "๐๐๐๐ ", which translates into "๐๐๐๐๐๐๐ / ๐๐๐๐๐." When you are dealing with a "๐๐๐๐ ๐๐ ๐๐๐๐", the best outcome is gaining their ๐๐๐๐๐ ๐๐ ๐๐๐๐๐๐ that your business can fulfil the financial obligation you have applied for - Getting your application right from the very start is so important - Making an application is about you building ๐๐๐๐๐. Treat the exercise with respect and put plenty of time aside to work on your proposal. As a business owner, I understand the time constraints we all have to deal with, but the strength of any proposition is in the quality of the information you can provide. From the start, you should be trying to make the funder's job easy to build trust with you and your business.
Letโs start off with the easy stuffโฆ
๐ ๐๐จ๐ง๐ญ๐ก๐ฌ ๐๐๐ง๐ค ๐๐ญ๐๐ญ๐๐ฆ๐๐ง๐ญ๐ฌ
A picture of your bank statements or sending statements in the post will not go down well with funders, and their credit teams in 2022 so avoid it at all costs. Most Irish pillar banks will provide access to your bank statements on their platforms. It's worth getting familiar with the platform and how to access statement's when you need them. Providing these in a direct download from your bank in PDF format will go down well with the credit looking at your application. If your funder mentions "open banking", take note and play by their rules where you can. This makes their job easier, so embrace the tech and use it to your advantage. Always remember, if you've got more than one bank account, tell the funder - Don't assume they only want the main trading account. They will also want to see the vat account ( if you have one, which you should ) and the savings account if you're lucky enough to have one of course.
Next on the listโฆ
๐๐จ๐ฎ ๐๐๐ฌ๐ญ ๐๐๐ญ ๐จ๐ ๐
๐ข๐ง๐๐ง๐๐ข๐๐ฅ๐ฌ ๐๐ข๐ฅ๐๐ ๐ฐ๐ข๐ญ๐ก ๐ญ๐ก๐ ๐๐๐.
Financial statements - Why are they important?. First, understand the difference between "Abridged" and "Unabridged Accounts" - You're going to need you're unabridged accounts including the admin expenses and breakdown of your balance sheet. A credit analyst will use the information here to determine how the business is being managed, and one of the most critical aspects of an application is your affordability to repay any debt. Certain financial products such as MCA loans can be accessed without them, but you should always have them available for review should they be requested. If your financial year ended within the last six months, while you might think, "๐๐๐๐ ๐๐๐ ๐๐๐ ๐ ๐๐ ๐๐ ๐๐ ๐๐๐๐๐ ๐๐๐๐๐ ๐๐๐" you should have the latest versions for that period available for review. Lenders will appreciate this and make a better decision when they have the most recent information
Then you will needโฆ
๐๐จ๐ฎ๐ซ ๐๐๐ฑ ๐๐ฅ๐๐๐ซ๐๐ง๐๐ ๐๐๐ซ๐ญ๐ข๐๐ข๐๐๐ญ๐.
If all your tax liabilities are up to date, then your accountant won't have an issue applying and getting tax clearance for you any time you need it. On collecting the same, we generally request one issued within the last four weeks, so we are comfortable all is up to date. It's doubtful you're getting approved for funding if you don't have one, or if approved without one, expect the lender to make it a condition to provide it before you can draw down your approved loan or finance product. Excuses on why you don't have it won't be entertained in 99% of cases. Given that Revenue is where the buck stops for all of us who own a business, you will have to appreciate that it is highly unlikely any finance provider will extend credit to a business when there is arrears with Revenue. The status of tax warehousing is coming up a lot more in conversations with providers now. It is likely to become a factor in decision-making if not reported correctly to the finance provider, so be sure and have your numbers when asked.
๐๐ฒ ๐๐ข๐ง๐๐ฅ ๐ฉ๐ข๐๐๐ ๐จ๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐ญ๐ก๐๐ญ ๐ฆ๐๐ค๐๐ฌ ๐ฎ๐ฉ ๐๐จ๐ฎ๐ซ ๐๐ฌ๐ฌ๐๐ง๐ญ๐ข๐๐ฅ ๐ข๐ญ๐๐ฆ๐ฌ ๐ฒ๐จ๐ฎ ๐๐ซ๐ ๐ ๐จ๐ข๐ง๐ ๐ญ๐จ ๐ง๐๐๐ ๐๐จ๐ซ ๐๐ง๐ฒ ๐๐ข๐ง๐๐ง๐๐ ๐๐ฉ๐ฉ๐ฅ๐ข๐๐๐ญ๐ข๐จ๐ง ๐ข๐ฌ ๐ญ๐ก๐ ๐ฆ๐จ๐ฌ๐ญ ๐๐๐ฌ๐ข๐ ๐๐ฎ๐ญ ๐ฏ๐๐ซ๐ฒ ๐๐จ๐ฆ๐ฆ๐จ๐ง๐ฅ๐ฒ ๐จ๐ฏ๐๐ซ๐ฅ๐จ๐จ๐ค๐๐, ๐ก๐จ๐ฐ ๐ฒ๐จ๐ฎ ๐๐ซ๐ ๐ฌ๐ฉ๐๐ง๐๐ข๐ง๐ ๐ญ๐ก๐ ๐ฆ๐จ๐ง๐๐ฒ ๐จ๐ซ ๐ ๐ฉ๐ก๐ซ๐๐ฌ๐ ๐ฒ๐จ๐ฎ ๐ฐ๐ข๐ฅ๐ฅ ๐ฌ๐๐, "๐๐ฌ๐ ๐๐ ๐
๐ฎ๐ง๐๐ฌ"
๐๐จ๐ฐ ๐ฒ๐จ๐ฎ ๐๐ซ๐ ๐ฌ๐ฉ๐๐ง๐๐ข๐ง๐ ๐ญ๐ก๐ ๐ฆ๐จ๐ง๐๐ฒ.
So to many, the idea of bringing in external finance comes from an idea to maybe expand the business in some way, purchase stock or general working capital requirement with money due in but not enough in the bank to comfortably cover what was is expected out. Every euro you borrow will cost money, and you should never borrow more than you need. Having a detailed budget for the spending is so important, not only for the lender but also for you as the business owner to demonstrate you know your numbers. A clear plan by the person borrowing the money is a great way to establish and build trust that you're in control of the overall project and spending.
I hope these nuggets have given you some insights into how it all works as separate parts to be then pulled together. Always remember, #KeepItSuperSimplรญ with Simplรญ Business Finance.
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