most business owners whether you are a start-up or a long-established business will need to apply for
a loan from their bank at some point in their business life a borrower will need to meet the
bank's debt equity ratios to be able to borrow funds and they will also have to show the bank
who they are and why the bank should lend them the money needed now in this video i will go
over a simple checklist and talk about what you should include in any business loan application
it is not uncommon for a business owner or someone looking to start a business to walk into the bank
that they have been a customer at and sometimes for many years and ask to speak to someone about
a loan having done little or no preparation the better prepared you are the more likely that that
loan will be granted and in a quicker and smoother time frame now there are some obvious questions
a bank will want the answers to and some of the information you provide is part of your
application and this is what we're going to talk about today if you are applying for a loan the
document you present to the bank should address as many of the following questions and points as
possible by thoroughly preparing this document you are showing the bank that you understand
your own business and you are giving your own business loan application the greatest possible
chance of getting a positive response from your bank
what name will the borrowing be under now this will either be the company name trust or your
own personal name now i talk about business entities in this video here how much funding
are you requesting you will need to clearly articulate the amount of funding required
be very very specific and list the actual dollar amount and this number should bounce back to the
cash flow forecast which will accompany the application what will the funds be used for
now you need to clearly explain where the funds are going now is it stock or equipment that you
need to purchase what are these purchases and why do you need them also be clear as to how these
purchases will benefit the business now in some cases the funds will be used to cover existing
overheads and other costs associated with your business while sales are maybe exceptionally low
now if this is the case make sure you demonstrate how when and why the uptake in sales will happen
what assets or security are you offering for the loan now this can be a mortgage over a property
a gsa over your business or a personal guarantee or a direct charge over a specific business asset
now you need to include supporting information for your request
if you're an existing business these things will include historical financial statements
up-to-date management accounts now these will be the tax accounts prepared by your accountant
and any relevant management accounts for the current year from the likes of xero myob etc or
whichever internal management accounting system you are using if you use and follow an additional
financial plan include that as well include a cash flow forecast for a minimum of the next
12 months broken down by month now this document will show the bank how much funding you require
to keep your business operational over the next 12 months it will detail the effect borrowing
will have on the business show the increase in sales as a result of the borrowing and include
repayments for the loan now i talk about cash flow forecasting in this video here personal statements
of asset and liabilities now this document should provide the bank with background on your
personal situation and show your financial ability to further support your business
if that's what's required any other contracts and agreements that are essential
to continuing your operations and your business now they might be insurance agreements relative
consents customer and supply contracts or agreements and any asset valuations
include a business commentary with your application provide a written executive
summary on your business now this should cover what services and products the business provides
how long it has been operating for who are the key people and any relevant industry information
include a copy of your updated business plan and your financial plan if you have one now i talk
about business plans and financial plans here in these couple of videos if your business has
been affected by covert 19 explain why how was it better or worse due to covert and what will happen
looking into the future explain any reduction or increase in sales because of covert 19
and how you believe your business will trade post covid now explain in detail any assumptions you
have made for any of the forecasts cash flows etc and the commentary you have presented and provided
and provide rationale and reasons for forecasts and forward thinking
statements you could have made why is business going to improve how is it going to improve
sometimes banks will not lend on a proposal because it simply doesn't fit with the bank's
current lending market it has nothing to do with the quality of your proposal you or your
business it is not uncommon for a bank to believe that they have lent too much into a particular
business sector and they feel that they might be over exposed to that industry if you are then
in that industry you're likely to be unsuccessful with your application so it is important that you
cast your applications a little wider than just your own bank try putting your application into
more than one bank you may well be turned down by one only to be approved by another in order
to ensure your best opportunity for a successful loan application you need to get the right advice
now i strongly suggest you talk to an accounting professional to help you get the numbers correct
and then talk to a finance broker one experienced in lending that you're applying for now talking
to a mortgage broker is not very helpful when you're applying for a business loan find reputable
specialist advisors who will help you get it right from the start now i have a strong roster
of professionals that my clients have used in the past to help them with their businesses and i'm
happy to put you in touch with any professional that you feel you might need thanks again for
watching if you like the video and would like to leave me maybe a thumbs up a comment or a question
do so in the comments below i read and reply to every comment i'd love to hear from you so if
you want to know more about starting a business and want tips on successfully improving your
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