An advance of funds from a lender to a borrower on the agreement that the borrower pays interest on the loan, plus pay back the initial amount of the loan at or over an agreed time.
 

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Tips To Apply Successfully For Funding
By Antony eldwin
Let’s face it, if you don’t have a proven track record or some notable credit worthiness, it is tough to get financing. Risk factors and high costs of servicing small accounts are the major reasons for banks and financial institutions to stay away from people who don’t have a good credit history.

However, the silver lining in the cloud is - business finance, small or big, is the bread and butter for banks and other financial institutions. If you can convince them that you are a good investment opportunity, you are on!

Following tips might make your application irresistible for banks or other institutions.

1. Be Thoroughly Prepared: You need to satisfy the lenders regarding your track record and your future viability. The documentation required for this has been discussed in my other article All About Small Business Funding.

If you are just starting out, you need financial projections for at least next three years. A financial projection typically comprises of:

• Estimates of your income and expenditure
• Working capital estimates
• Cash flow statement
• Projected Balance Sheets
• Precise utilization detailing
• Profiles of decision making people i.e. top management who would be handling the project(s) for which you need financing
• Comprehensive business plan
Some of these documents require professional expertise and you would need a professional accountant to prepare them.
You would also need the following documents apart from above mentioned documents, if you are already an established business and want a small business to fund your working capital requirements or your expansion plans.
• Copies of the Balance Sheet, Profit and Loss statement, and tax returns of the company
• Personal financial statements and tax returns for last three years

2. Anticipate Questions: You need to be well prepared, and need to have a fair understanding of the lending process to anticipate questions you are most likely to face.

Remember, lenders need to be convinced about your repayment ability. Ideally your business plan should also include answers to your banker's questions. The most frequently asked questions are:

•How much money do you need? Be exact! You can add a little extra for contingencies.
•Long term or short term? Be prepared to go into detail supported by your documents, the time you require to repay the loan.
•What are your utilization plans? Explain whether it is for capital expenses, working

   

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