How to apply for Small Business FinancePublished on 13th March 2019 2019-03-13T12:00:00+00:00
One of the biggest challenges to overcome when running an SME business is ensuring that you have sufficient access to the funds you need. Although pulling together the funds that you may already possess could seem like a wise move to many, it’s a risky strategy that could deprive you of funds you may need later in your development. However, if you’re looking to stimulate growth or reinforce your finances, there is another pathway that you may wish to explore. Applying for Small Business Finance could connect you with a wide range of business finance solutions, allowing you to source an appropriate solution for whatever your long- or short-term goals may be. So if you’re looking to receive external funding for your business, here’s what you need to clarify when applying for Small Business Finance.
- Will you need to provide security?
- Will lenders check your business’ credit profile?
- What documentation will you need to submit?
Will I need to provide security when applying for Small Business Finance?
Small Business Finance covers a wide variety of finance solutions which are either Secured or Unsecured. Secured products require you present collateral in the form of business assets such as equipment, machinery, vehicles or property. Although this gives lenders more confidence to provide larger lump sums and offer favourable terms, should your business fall behind in the monthly repayments they’ll have the right to repossess these assets in order to recover what they’re owed. Meanwhile, unsecured solutions don’t require you to offer any assets as collateral, although this can often make them more challenging to obtain, especially with a weak credit profile. However, for reassurance, lenders may request that you provide a written or verbal Personal Guarantee before they agree to lend.
Will lenders ask to review my business’ credit profile?
Generally, with most Small Business Finance products, lenders will want to inspect your business’ credit score. However, your score won’t always be used against you. When applying for some products, lenders may look at other aspects of your business, such as past income, when making their decision. Nevertheless, lenders usually inspect your credit profile in order to ascertain the risks of lending to you and the likelihood of your business fully repaying the agreement on time. Some things lenders will be looking for when reviewing your credit profile include whether you have outstanding CCJs, Arrears or Accelerated Payment Notices and if you possess a reliable history of repaying your debts. Note that if your business has a weak credit score it may affect the interest rate that you’re offered with the agreement. Therefore, the weaker your score the more interest you’ll pay, and vice versa.
What documents will I need to submit with my application?
As well as granting lenders permission to review your credit profile, you’ll also need to submit an array of documents with your application. This will help lenders gain an insight into how your business operates and how well you’re performing financially. Depending on your chosen business finance solution this can range from your latest and past banks' statements, sales reports, invoices, customer orders and security documents to Profit & Loss statements. In order to be clear on what documents are required with your application, review all relevant information regarding your chosen product or request for a lender to explain the submission process to you in greater detail.
Looking for Small Business Finance?
As well as creating a detailed business plan and assembling a dedicated team, one of the key obstacles to overcome when running a business of any size is ensuring access to sufficient external funding opportunities. But as a developing SME, you may feel that the solutions available to you are limited, which isn’t always the case. As soon as your business reaches its 2nd trading year, one of the finance packages you could qualify for is Small Business Finance. Covering a number of finance solutions, this package could help support a wide range of key business projects and goals. So if you need help maintaining your finances, acquiring new equipment or carrying out refurbishments, apply for Small Business Finance today, or find out more with Rangewell.
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