You can’t sugar coat it. Applying for business finane is tedious and painful, so here is how to nail your application for a working capital loan.

The trick is to have everything in place before you start.  Patchy paperwork  raises questions about your business and your competence to run it. 

It begins with the application form.

It’s personal

A lender wants to get personal and will ask for details such as your age, marital status, where you live, the location of your work place and your contact details.

You will be asked to provide photo identification – a driver’s licence and/or a passport.  Preferably both.

Solid citizen

Many lenders will want a Statement of Financial Position.  This details what you have in the bank account, what you own and what you owe.  This is really about demonstrating your credentials as a solid citizen who won’t, as the song goes, take the money and run.

Blemishes

The lender will conduct a company credit check. Poor credit history will make things difficult, but won’t necessarily rule you out.  Most finance companies understand  that the occasional credit blemish happens to the best of us.

Many finance companies will require security for a working capital loan and want to place a  charge over the assets of the business, so they will check the Personal Property Securities Register (PPSR) to see who else you owe money to.

Positive picture

Lenders are looking for a positive picture of you and your business.  Your financial documents will go a long way to provide that.

Yes, pulling all that stuff together is a headache, but it ensures you quickly get the funds you need at the best rates available.  Ask your accountant or book keeper to help and give thanks for the invention of online accounting software!

These include:

• Interim financial statements. 
• End of year Balance Sheet and Profit and Loss Report
• BAS statements for the last 3 quarters
• Most recent tax office running balance – your accountant will have access to this..
• Current bank balance and transactions for the preceding 90 days.
• Up to date aged debtors listing
• Up to date aged creditors listing
• Where a Trust is involved, a copy of the Trust Deed

Customers

If you want to raise finance against your receivables, it is important to provide evidence that you have delivered the goods or services to you customers.

The following documents will help.

• A copy of invoices showing the amount owed, the name of the customer and the payment dates..  It’s not a good sign if an invoice is overdue.
• Proof of delivery – including dockets, emails, payment schedules or anything that shows that your customer has received the product or service
• Terms and conditions of sale to check if there are any conditions which could reduce the final amount paid by your customer.

“Yes!”

Your application for a working capital loan will have the inside track if you are able to provide the information described above.

If credit insurance, personal guarantee insurance or a performance bond is involved it may take a little longer.

Finance companies are sensible enough to understand that not all their boxes will be ticked, but that might not rule you out – especially if you have given them a positive impression.

It’s a competitive world and lenders are in business to do business

The important thing is to create the impression of a strong business with strong and capable management.