Dynamic Business

A well-prepared and neatly presented package of information should include the following items:

1. Financial information
Lenders rely heavily on financial information, so essential inclusions are the profit and loss and balance sheet statements for your business. Don’t forget to include interim financials if these are more than a few months old.

If you can include an aged listing for both debtors and creditors it will enable potential lenders to see that your business is vigilant in following up customers for payment and that it pays its accounts when due. A cashflow forecast is another useful inclusion, as it shows how the loan will be afforded and helps alleviate any concerns of a working capital shortfall in the business.

An asset and liability statement for each relevant director or shareholder should also be included, with individual statements outlining details of all assets and liabilities held in their personal names. All this financial information needs to be correct, with suitable explanations provided for any extraordinary items or significant variations.

2. Business plan
Forget the lengthy business plans of old that were laboured over for days and then read by no one. Today’s lenders need a short but information packed business plan that clearly conveys the key aspects of your business and future plans, including the following details:
• Overview: including business name, address, owners, history, industry, products, structure, related companies and number of employees. If there are multiple companies a family tree would also be useful.
• Management: including education, industry experience and professional accomplishments.
• Customers: details on the average customer and how your product meets their needs, including any unique points of difference.  If there are a number of key customers, explain how the loss of one or more of these would be handled.
• Suppliers: details of any key suppliers to your business and alternatives should a significant supplier be unable to meet your future business needs.
• Business goals: state your expectation in terms of sales, income, business operations and marketing strategies for the next three years. Substantiate these expectations through business performance to date and plans that detail how these goals will be achieved.
• Risks: list the key risks in your business to give a potential funder comfort that you’ve assessed the risks and have contingency plans in place to cope with them.

Remember to make the document easy to read by avoiding industry-specific acronyms or terms, whilst keeping the professional image through ensuring it’s free of spelling errors.

3. Supporting information
Be sure to include items such as brochures, newspaper and magazine articles, copies of advertisements, client testimonials, references and other promotional material. These boost your business’ profile and highlight its professionalism and approach to business development.

Red carpet, not red tape
To enjoy benefits when borrowing that include cheaper pricing, quicker loan approval and, perhaps most importantly, understanding and flexibility if there’s difficulty repaying the loan, it’s paramount to have a good person to person relationship with your lending manager.

Many small business owners enjoy these benefits and your business can too. Make sure you find a local lending manager that can meet with you in person and visit your premises. It’s also crucial that they suit your personal style. Ideally they should be interested in your business and have some understanding of your industry.

Once your initial relationship is established, keep them updated on how things are going. If they have a good knowledge of recent activities they’ll be better positioned to assist. When they call, don’t be tempted to ignore it. Return the call promptly as you normally would, giving your bank manager the respect you’d like to be shown in return.

So, be prepared and confident when seeking a loan and remember to share your vision and enthusiasm about your business. Keep in mind that establishing a relationship with your lending manager is an investment like any other business relationship, with enormous dividends that can give your business the credit it deserves.

- Matthew Nolan is managing director of Provident Cashflow (www.providentcashflow.com.au). He has more than 18 years’ experience in banking and finance, specialising in providing finance to SMEs.