Businesses need to make themselves an attractive proposition if they want to secure vital loan cash, a Shropshire accountant has warned.
Mark Bramall is the corporate finance director at Dyke Yaxley Chartered Accountants, in Shrewsbury, and he said the landscape of banking was now very different.
“It’s five years since the banking world changed forever – prior to that, finance offers were underpinned by the belief that land values would increase.
“But although the security of a loan was not the only factor taken into consideration, it certainly carried more weight than it does today when banks now look at far wider issues before they agree to lend.”
Mark said there had been a definite upturn in confidence in the last few months, and businesses were increasingly looking to borrow money to fund growth, acquisitions and mergers.
“To secure a loan though, it’s crucial that businesses prepare a full and strong application in order to persuade the lender that they’re a viable candidate.
“Ofcourse, any application will look at the financial performance and viability of the proposed new venture, but it’s also worth considering including information about how the business will be managed.
“Businesses will need to demonstrate good management, so think about including the CVs of key staff within the business plan – this will prove the management team has a good track record and will show the lender how capable they are.”
Mark said to improve the chances of an application being successful, businesses must include an overview of the company, details of key customers and suppliers, and information on its position in the market.
“List the full trading accounts for the last two years, the latest management accounts, and details of the assets and liabilities of the business.
“Produce a business plan with financial projections and assumptions, and give details of the systems the directors use to manage the business and early warning criteria.
“It’s likely that the owners or directors may be asked for personal wealth and income statements, especially where personal gurantees are required, so you should also consider this information at an early stage to help with the application.”
Dyke Yaxley’s Mark Bramall