Home New loan Consider these tips before clicking Submit

Consider these tips before clicking Submit

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You have bold plans and you want the bank to lend you money to help you realize your business idea.

Obviously, going to the bank with a solid business plan is important, but what does it actually look like?

And what other factors matter in getting you approved or rejected for a business loan?

Bendigo and Adelaide Bank small business banking manager Joe Formichella said start-up entrepreneurs should provide a detailed picture of their financial history and business projections.

“Adaptability, innovation and resilience are all key common themes in business ideas and successful businesses,” he said.

“This old adage is true: to be brave without being careful is reckless and to be careful without courage is cowardice.

“Make sure you find the right balance. “

Tips for applying for a business loan

Commonwealth Bank Executive Director of Small Business Banking Claire Roberts said cash flow issues are one of the main reasons small businesses fail in their early years.

“Carrying out regular forecasts, closely monitoring your cash flow with the right tools, and having emergency savings are just a few ways to help you prepare for cash flow shortages and make the most of any surplus,” he said. she declared.

Ms Roberts said aspiring entrepreneurs need to figure out what sets them apart and use it to their advantage.

“Really research and understand what your customers want and what makes your competitor’s offering different from others in the market,” she said.

It also makes sense to listen to feedback from seasoned business owners.

“While getting constructive feedback may seem difficult, it will help transform your business into a better shape,” Ms. Roberts said.

A good plan

Mr. Formichella said a strong business plan should include what will make the company unique, its history and the products and services it will produce.

It should also detail the competitive landscape, key customers and suppliers, and describe the corporate structure and ownership of the business.

Prospective business owners must provide financial and bank statements, from which the bank will assess the business owner’s ability to repay a new loan, Formichella said.

“The bank will also ask for projections over a period of at least 12 months to understand what the future state of the company will look like in order to guarantee the service of any additional debt, beyond existing commitments,” he said. -he declares.

Common red flags

Mr. Formichella said that a poorly prepared business plan is one of many common red flags that can lead to business loan applicants being turned down.

Poor personal or business credit history, inconsistent cash flow, and a lack of evidence to show how they intend to repay the loan can also lead to rejection, as well as over reliance on a few clients or customers. key suppliers.

Before jumping

Before you leave your 9-5 to become an entrepreneur, there are a few steps you need to take to get off to a good start.

Getting independent financial and legal advice is important, and you should also have an accountant review your business plan.

Be sure to get advice on the right business structure – whether you operate as an individual entrepreneur, partnership, trust, or business – as each has its benefits and risks.

“[You should have] previous experience and knowledge of the industry in which the company will operate [and] proof of the support or commitment of potential customers, ”said Mr. Formichella.


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