Small Business Lending Tips – The Non-Judgemental Toolbox
Helping put a financial story across in a non-judgemental financial world
The Non-Judgemental Toolbox
What do you need?
Most small businesses I meet believe that an extensive Business Plan will help in getting financial support.
Whilst this in some ways is true, probably 90% of the information you have collated is defunct with a financial business that is purely centred on mitigating risks.
Most new business lending is centred purely on whether or not you can provide any information at all rather than the length of the plan you have put together.
The Small Business Manager will very rarely have the authority to make any form of judgemental decision on the business banking account, but will more than likely need to submit documents to their credit control team to reinforce the non-judgemental decision that the system has made.
What I have attached below, will speed up the process of a decision, simplifying your bank managers role as all the information he needs to submit is neatly gathered together, which, given that they are extremely busy people, will give your lending proposal more chance of getting completed (and submitted) over any other lending requests they have received.
For any business lending between £1k – £30k I would recommend putting together:
The 2 Page Proposal
- What is your business, what sector are you trading in, and what is your unique selling point/competitive advantage
- If you have a website, include the link.
How will you make it successful?
- Who you are and what is your experience – Highlight similar business management experience, or previous successful business experience.
How much debt do you need?
- Iterate how this will be spent down to the final £
- Do not include your wage or utilities. This is purely to come out of the business expenses when functioning.
- If it is for an asset, put down that you want asset backed finance (HP/Lease etc)
How will you repay the debt?
- Where will the income come from?
- Is it from sales expected?
- How can you prove that?
Include a personal Asset & Liability Statement if you can:
- Asset = car, cash, shares, boat, house etc
- Liabilities = Debts outstanding
- Personal Income = current monthly income – bills
How much is your stake?
- Generally any financial provider does not want to take on all the risk. Most banks like 50/50 split.
- Most finance house want to see a decent deposit (30%)
- Most private financiers also like to see that your family and friends are backing you on this too.
Cash Flow forecast
- They are not expecting you to put it to the pence, but if they ask you a question about your figures, you need to know how you came to it. And saying that you just guessed what it will be is not really enough.
- Worst case scenario is great, but this does not mean making your business hugely unprofitable, as why would anyone want to lend to a business that couldn’t afford to pay you back.
Any Other Important points
- Attach a summarised form of the last 2 years trading accounts if you have them
- Other important points you feel may make a difference to the decision, ie long standing personal customer
If you need any assistance in putting this piece together please do not hesitate to contact us directly via email firstname.lastname@example.org, via the website at www.oursalesexperience.com or via mobile on 07797787389.
Have a fantastic day!
Yours in Sales, Service & any other Small Business Help.