Business Loans

Be realistic in your forecasts

Be realistic about your predictions for revenue and expenses. Ensure that you can make a good case to substantiate your forecasts. If you are unsure about making budget forecasts, consult your accountant.

Build your case

The more information you can supply the better. Lenders want to understand not only you, but also your business.

Most lenders will want to see evidence of consistent financial performance in your business activities. They will want to see:

• balance sheets
• tax returns
• cash-flow budgets

Think hard about other documentary evidence you can gather that will assure lenders you are a good risk.

Consider fees

Commercial loans attract a wide range of fees. This is because of the more complex structure of the loan compared to personal or home loans.

Line fees, limit fees, over-limit fees, overdraft fees and temporary overdraft fees may sometimes be quoted as a percentage of the total loan amount rather than an exact dollar amount. These should always be spelled out in your loan contract.

Keep accurate records

Keep accurate records of your deposits and ATM transactions. It is also wise to keep copies of your loan application and approval documents in a safe place.

This is the best way to avoid hefty fees which may be charged by a bank when its customers want to see copies of their cheques or loan files.

Prepare for the interview

Do you have all the information the lender wants to properly assess the application? Find out exactly what information is required and what forms need to be filled out so that you don’t waste valuable time for either yourself or your prospective lender. Have your financial information organised in a way that makes it easy to review.

Proof of assets

How is your business structured? The lender may want to satisfy itself that the proper authority has been given to office bearers to apply for finance:

• Certificates of Incorporation and Registration
• Trust deeds etc.

A company seal is usually required to complete mortgage registration documents on behalf of a company.

Proof of Identity

If you are not an existing customer you may need to supply proof of identity as per requirements laid out within the Financial Transactions Reports Act (1988).

Sell yourself

Make sure you present yourself and your information in a professional manner. Consider wearing a suit to your meeting. Be punctual.