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Tips when seeking finance for business growth
Across the island of Ireland, there is some evidence that small to medium-sized enterprises (SMEs) are reluctant to take on new borrowings or invest at present as uncertainty over Brexit continues.
The latest figures released by UK Finance show that 2,075 new loans were approved for SMEs in Northern Ireland in the quarter ended December 2018 (value £394m), down from 2,431 (£414m) in the previous quarter.
In the Republic of Ireland, working capital remains the most common reason for credit applications among micro and small firms according to the Central Bank’s latest SME Market Report whereas credit for growth and expansion is more common among medium firms.
Recent reports suggest that although business investment has slowed due to Brexit-related uncertainty, demand for mortgage, personal and corporate lending is growing.
Tips when applying for finance
When applying for finance, it is important to bear in mind that banks want to know who they are lending to, what the finance is required for, why it is needed and how it will be repaid.
It is therefore important to be clear about what you are looking for and able to justify your application whether it’s for overdraft facilities or a loan.
Be ready to support your application with relevant, accurate financial information along with aged lists of creditors and debtors (what you owe, what others owe you, and when payments are due).
In addition, banks will expect you to provide well-thought out, reliable forecasts. You should be able to show that you understand your cashflow gaps and that your taxes are up-to-date.
Check the lender’s website for details of products and services that could improve your business and keep in mind that a bank finance may not be your only option. Alternatives such as asset based lending, trade finance, peer lending and venture capital may also be worth considering. We previously discussed alternative finance here.
As with most things in life, good preparation is the key to success when seeking finance so take time to prepare your application carefully. If you need information and/or advice about your application, please contact a member of our team.