Although lending conditions are improving and new alternative funders are entering the market all the time, you still need to make your business attractive to finance providers. The following tips will help to improve your chances of securing the finance:
Perfect your business plan
When you approach any finance provider with a funding need they will want to see a well prepared business plan that is realistic, professional and concise. It must show you have done your homework and your goals are backed up with genuine financial forecasts. You must be able to justify these figures with your research. Don’t forget to highlight your experience and background as this is often overlooked by applicants. Demonstrating your credentials are just as important as the business idea.
Review your credit score
Your credit report plays a major part in your application for finance. Its free to obtain and review your credit report, however less than 50% of people check their score. It is an important part of managing your personal finances and could highlight problems you can correct. http://www.experian.co.uk/
Positive working capital
Working capital is a measure of the business financial health. The greater the difference between assets and liabilities the more attractive the business will be to would-be funders. Maintaining good cash flow is very critical. Lenders will be put off if the cash flow is disorganised or if credit terms are out of sync. Naturally if there is little profit to demonstrate in the bank accounts, there will be no chance of demonstrating affordability.
Pay your bills on time and cut spending
Finance providers will analyse your business bank statements and if there are returned direct debits and/or bank charges it will impact the chances of securing finance. Reduce unnecessary expenditure and improve the cash flow picture. This will help to show lenders that you are in control financially.
Ask for enough money
When calculating what finance you need, plan that everything will take twice as long and cost twice as much. Break down all the costs you can think of and generate quotes ready to present to the finance provider. The more information provided about the purpose of the finance the more secure the respective lender will feel about the proposal.