If you are in the process of setting up a business or are already running one then you may require funding.
This could be in the form of a start up loan, funding to help during periods of economic difficulties or to enable you to develop and grow your company.
Whatever the reason, it helps to be aware of what to expect. To be successful with your application, you will need to prove that you are a reliable borrower and that funding will enable you to build and maintain a profitable business.
What to expect when applying for funding:
You may need to provide the lender with a business plan, which should explain your vision and how you intend to achieve it. This should be well thought out as the better your plan the more likely you will succeed in obtaining a loan.
How much do you need?
Remember that everything you borrow has to be paid back, with interest, so only borrow as much as you need.
Be fully aware of the repayments terms and be confident that you can meet them, failing to do so could incur financial penalties from the lender and the possibility of your business failing as a result.
You may be asked to prepare a cash flow forecast; this will help the lender and yourself to see how cash moves through the business and also enables you to see how much you have left once all your costs have been met, determining how much you need to borrow.
If you are a seasonal business, remember that your cash flow will vary each month so be prepared for this.
It is highly probable that you will need to pass a credit check so make sure that you are aware of your credit history before you apply. It helps to have had a problem free past, where your record of borrowing and repaying shows no defaults on store cards, credit cards or other bank loans. If you can find out what your credit history is before you apply, it will prevent you applying for some loans that are likely to be rejected.
If you have time before you need your loan you could work on improving your credit history.
There are many lending options available so research and figure out which will work best for you.
The options include banks, loan specialists, peer funding and investors. All have different terms and conditions so decide which one suits your situation best.
Compare the various interest rates and repayment terms. Do they offer a break from repayments? Do they need security against the loan? The terms and conditions of each lender are significant as they won’t all suit your situation
Once you’ve earmarked a lender and know how much your loan will cost (try using their online calculator if they have one), you will need to apply. Check you are eligible before starting; most lenders will have an online eligibility checker.
Fill out your application form
Personal details, information about your business, your trading history and the plans you have for the future of your company will be required to complete the loan. You may need to show recent bank statements, recent accounts if you are already up and trading plus some form of ID.
You will need to specify the amount you want to borrow and an outline of your financial position as this will give the lender an indication of your abilities to repay.
Have you been successful?
An online application can be processed quickly, however some decisions can take up to 6 weeks. If you have submitted a good application and have prepared well you stand a better chance of success.