How to get your loan application approved

Simplí Business Finance | AIBF
Gary Grimes, Managing Director at Simplí Business Finance.

Looking to bring in finance to your business to help with working capital, stock loan or business development opportunity? 

In order to secure vital funds, its essential to prepare your application properly. To help you with this important step, we’ve secured the help of a two-time Business All-Star Accredited Master Practitioner in SME Financing.

In the following piece, Gary Grimes of Simplí Business Finance will lay out the four most basic yet essential items you need when looking to bring external debt finance into your business.

Over to you Gary…

The origins of the word credit can be linked back to the Latin word “𝒄𝒓𝒆𝒅”, which translates into “𝒃𝒆𝒍𝒊𝒆𝒗𝒆 / 𝒕𝒓𝒖𝒔𝒕.”

When you are dealing with a “𝒄𝒓𝒆𝒅𝒊𝒕 𝒕𝒆𝒂𝒎”, the best outcome is gaining their 𝒕𝒓𝒖𝒔𝒕 𝒐𝒓 𝒃𝒆𝒍𝒊𝒆𝒇 that your business can fulfil the financial obligation you have applied for – Getting your application right from the very start is so important – Making an application is about you building 𝒕𝒓𝒖𝒔𝒕.

Treat the exercise with respect and put plenty of time aside to work on your proposal. As a business owner, I understand the time constraints we all have to deal with, but the strength of any proposition is in the quality of the information you can provide. From the start, you should be trying to make the funder’s job easy to build trust with you and your business.

Let’s start off with the easy stuff…

6 Months Bank Statements.

A picture of your bank statements or sending statements in the post will not go down well with funders, and their credit teams in 2022 so avoid it at all costs. Most Irish pillar banks will provide access to your bank statements on their platforms. It’s worth getting familiar with the platform and how to access statement’s when you need them.

Providing these in a direct download from your bank in PDF format will go down well with the credit looking at your application. If your funder mentions “open banking”, take note and play by their rules where you can.

This makes their job easier, so embrace the tech and use it to your advantage. Always remember, if you’ve got more than one bank account, tell the funder – Don’t assume they only want the main trading account. They will also want to see the vat account ( if you have one, which you should ) and the savings account if you’re lucky enough to have one of course.

Next on the list…

You Last Set of Financials field the CRO.

Financial statements – Why are they important?. First, understand the difference between “Abridged” and “Unabridged Accounts” – You’re going to need you’re unabridged accounts including the admin expenses and breakdown of your balance sheet.

A credit analyst will use the information here to determine how the business is being managed, and one of the most critical aspects of an application is your affordability to repay any debt.

Certain financial products such as MCA loans can be accessed without them, but you should always have them available for review should they be requested. If your financial year ended within the last six months, while you might think, “𝒕𝒉𝒆𝒚 𝒂𝒓𝒆 𝒏𝒐𝒕 𝒅𝒖𝒆 𝒕𝒐 𝒃𝒆 𝒇𝒊𝒍𝒆𝒅 𝒖𝒏𝒕𝒊𝒍 𝒙𝒙𝒙” you should have the latest versions for that period available for review. Lenders will appreciate this and make a better decision when they have the most recent information.

Then you will need…

Your Tax Clearance Certificate.

If all your tax liabilities are up to date, then your accountant won’t have an issue applying and getting tax clearance for you any time you need it. On collecting the same, we generally request one issued within the last four weeks, so we are comfortable all is up to date.

It’s doubtful you’re getting approved for funding if you don’t have one, or if approved without one, expect the lender to make it a condition to provide it before you can draw down your approved loan or finance product.

Excuses on why you don’t have it won’t be entertained in 99% of cases. Given that Revenue is where the buck stops for all of us who own a business, you will have to appreciate that it is highly unlikely any finance provider will extend credit to a business when there is arrears with Revenue.

The status of tax warehousing is coming up a lot more in conversations with providers now. It is likely to become a factor in decision-making if not reported correctly to the finance provider, so be sure and have your numbers when asked.

My final piece of information that makes up four essential items you are going to need for any finance application is the most basic but very commonly overlooked, how you are spending the money or A phrase you will see, “Use of Funds”.

Gary Grimes, Managing Director at Simplí Business Finance with his 2 In A Row Accreditation certificate and medallion.
How you are spending the money.

So to many, the idea of bringing in external finance comes from an idea to maybe expand the business in some way, purchase stock or general working capital requirement with money due in but not enough in the bank to comfortably cover what was is expected out. Every euro you borrow will cost money, and you should never borrow more than you need.

Having a detailed budget for the spending is so important, not only for the lender but also for you as the business owner to demonstrate you know your numbers. A clear plan by the person borrowing the money is a great way to establish and build trust that you’re in control of the overall project and spending.

I hope these nuggets have given you some insights into how it all works as separate parts to be then pulled together. Always remember, #KeepItSuperSimplí with Simplí Business Finance.

To learn more about Gary Grimes – Simplí Business Finance, visit their All-Star showcase page here.