This is a guest blog I provided in February 2014 for my good friends at www.matrixcapital.co.uk
There’s little doubt that the market for raising business finance changed immeasurably during the summer of 2008, and SMEs in particular have found it very difficult to access finance over the last 5 years.
Whilst the economy is undoubtedly showing signs of improvement, and there is much more confidence around, with Banks once again setting their Managers targets for new lending, business owners cannot assume that accessing finance is going to get markedly easier.
So, how does a SME give itself the best possible chance of successfully applying for finance? I have 5 key tips ;
1. Be Realistic. Are you asking for a sensible amount of finance? Put yourself in the lender’s position – would you lend this amount of your own money to your business?
2. Be Honest. If you or your directors have any skeletons in your cupboard, be up front about them. Banks will find out about previous failed companies, CCJs etc during their due diligence, so there’s no point trying to hide any adverse information. Non-disclosure of a material fact destroys your credibility and this is a critical component of the application.
3. Expect to give personal guarantees and prepare a schedule of asset and liabilities to demonstrate you have some personal means to back this up.
4. Take expert advice to help prepare a robust and flexible Business Plan. This will highlight the strengths of your business and help mitigate any risks. Don’t buy advice on price – you get what you pay for in this regard.
5. Allow plenty of time. A rushed credit application is highly unlikely to succeed. You only get one chance to make a good first impression so prepare thoroughly and you will hopefully be successful. Remember, “Luck is preparation meeting opportunity!!”