Applying for a Business Loan?
It pays to know what Lenders are looking for.

The Ministry of Business, Innovation and Employment (MBIE) state “Lenders want to see good financial habits, a clear vision for the future, and a funding proposal supported by processes and a strong team”.

So, what else can help you improve your chances of getting finance.


Have a plan

It’s important to arrive at a meeting with your financial adviser, prepared. Make sure you have a comprehensive plan that concisely provides the potential lender with this information:

• Why are you in business and what is your vision for the future?
• What is the capability within your business in regard to people as well as systems? And be honest, if you have any gaps, outline how you propose to address these.
• What is your current financial position? A good starting point is the previous two years.
• An explanation of your business and its purpose - why do you need the funding, how will it be used and what is your approach for paying the loan back?

Track Record is important
While the lender wants to understand your plans for the future, looking at your track record is of equal concern to them. Financial behaviour is important. Lenders will typically look at the last 12 months of bank transactions to ascertain if you’re responsible with your money. Do you pay your bills on time, how do you service any credit cards or other loan payments, is there excess spending on non-essential items? These are just a few examples of what they may look for.

Therefore, it’s a good idea to develop sound business and financial habits early on.

More than just numbers
There’s no denying that your financial situation and cashflow are important factors for lenders to base their decision on. However, it’s not the ONLY factor. You as a person and your character and behaviours play an important role too. During the meeting and by looking at your plan, the lender needs to be re-assured they can trust you to make your repayment obligations.

Lenders often prefer businesses that have professional support, some governance, or an advisory board. Do you have a great team of people around you that you meet with regularly, that can support you and provide advice? It’s common for this governance body, whatever you wish to call it, to include the likes of an accountant, and industry adviser and a lawyer.

There’s no one size, fits all
Bank loans are one option for finance, but they are not the only option. Depending on your current situation and your financial goals, a host of different options may be available including borrowing from bank and non-bank lenders, funding form within your business, funding from business assets, grants, equity etc. Independent financial advisers, like Rapson Loans & Finance, will sit with you, understand your situation and talk with you about your options.

Talk to our in-house experts on everything to do with business loans. Contact Us

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