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10 ways to make your business more attractive to lenders

10/11/2015 / Comments 0

10 ways to make your business more attractive to lenders

Despite lending conditions improving, some businesses – particularly the smallest ones – are still finding it difficult to secure business funding.

Much of the blame for these rejections is placed directly on the lenders, but there are steps businesses can take themselves to improve their chances of being accepted.

Here are 10 ways to make your business more attractive to lenders and improve your chances of securing business finance.

1. Perfect your plan

When it comes to traditional lending, such as loans and overdrafts, many lenders will look at your business plan before making their decision. For this reason, you need to make sure your business plan is the best it can be. To achieve this you should make sure it clearly portrays where your business is heading, what your future strategy is and realistic financial forecasts. For the best results it must be professional, concise and well written.

For more tips on how to write the perfect business plan take a look at this guide.

2. Know your numbers

Cash is king, so it’s crucial to demonstrate that you know your numbers and have considered all the key factors that could impact your cash flow. When assessing your funding application the lender will want to know: how much external funding your business requires, where this money will be invested, what your projected revenues and profits are and what assets you will need to acquire.

For more tips on cash flow forecasting take a look at this guide.

3. Improve your credit score

A key deciding factor for lenders is how big a risk they believe your business to be. Your credit score can be a good indication of this so make sure it’s as good as it can be. Improving your financial standing by making a conscious effort to pay bills and invoices on time can also enable you to negotiate a better rate.

4. Hire a strong team

For many potential investors the level of faith they have in your management team can be a large deciding factor. So it’s vital to showcase the strengths of your team and explain how you intend to cover the key areas of production, sales, marketing, finance and administration. It can also be beneficial to highlight how committed you are to the business through how much time and money each of the management team will contribute.

5. Reduce spending

Another way to show your business is not a risk is to demonstrate a healthy cash flow by cutting back on unnecessary expenditure. Analyse your current spending to see where your money is going and make cutbacks where possible.

Look at each outgoing and ask yourself if you really need it in order to be successful? Do the ends justify the means? This can help you decide which things can be cut and which ones are fundamental to your business’s success.

It can also be beneficial to regularly benchmark your existing suppliers to make sure you’re getting the best deals for your business – although be careful not to sacrifice quality for cost as this is potentially damaging to your business.

6. Be realistic

Whilst you might think you deserve access to hundreds of thousands of pounds, if you’re not going to be able to make the repayments your business will not be considered. The key is to be realistic with your applications.

Similarly, when it comes to cash flow forecasting you need to be sensible with your predictions. Failing to be realistic could cause you to fall behind on payments which won’t be good for you or the lender.

7. Do your homework

There’s no point pitching to a provider that won’t consider your business or applying for a product your business doesn’t qualify for. Do your research to familiarise yourself with the financial options that exist.

If you know exactly what you’re looking for, compare a few different lenders and get it clear in your head how the facility works and what you can expect. When you then approach a lender, you’ll be able to demonstrate a good knowledge of the product and how it will benefit your business.

Our free guide to funding products looks at the pros and cons of various facilities and can help you to narrow down your search.

8. Find brand ambassadors

Particularly with alternative forms of lending, such as crowdfunding, having brand ambassadors that love your products or services as much as you do can inspire confidence in your business idea and encourage investment.

9. Identify risks

Many businesses shy away from highlighting any risks or weaknesses though fear of putting off potential investors, but taking this approach can actually be counterproductive.

All lenders know that with each business there will be certain risks that will need to be overcome in order to be successful.

By avoiding the subject completely it can seem like you haven’t explored all of the necessary avenues and put doubt into the mind of the lender.

In contrast, by openly discussing these disadvantages or weaknesses from the outset you can inspire confidence in your business plan.

10. Be patient

With so many different products and providers to choose from the road to funding can be a hard one, but don’t give up. There are so many funding methods to choose from and just because one option doesn’t work for you doesn’t mean that the right funding isn’t out there. Often you’re just not looking in the right place.

Utilising the expertise of a commercial finance broker can help to identify the best solutions for your business’s requirements. With extensive knowledge in the funding industry, a good broker will listen to your funding requirements before introducing the facilities and lenders that will enable you to achieve them.

As a commercial finance broker Hilton-Baird Financial Solutions can help your business in its search for funding, call our team on 0800 9774833 or email info@hiltonbaird.co.uk to discuss your options.

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  • Regency Factors
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  • Bibby Financial Services
  • Innovation Finance
  • Barclays
  • Platform Black
  • Team Factors
  • Everline
  • GapCap Cashflow Finance
  • Lloyds Bank Commercial Finance
  • ABN AMRO Commercial Finance
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  • Factor 21
  • Market Invoice
  • iwoca
  • Metro Bank SME Finance
  • Close Brothers Invoice Finance
  • Santander Corporate & Commercial
  • Outsauce
  • PNC Business Credit
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  • Leumi ABL
  • Asset Advantage
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  • 1pm
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  • Ashley Commercial Finance
  • Trade Finance Partners
  • Positive Cashflow Finance
  • Creative Capital
  • Royal Bank of Scotland
  • Roma Finance
  • Davenham Trade Finance
  • Working Capital Partners
  • Skipton Business Finance
  • Hitachi Capital Invoice Finance
  • Secure Trust Bank
  • Calverton Finance
  • Aldermore Invoice Finance
  • Woodsford Tradebridge
  • Nucleus Commercial Finance
  • Shawbrook Business Credit
  • Pulse Cashflow Finance
  • Invoice Cycle

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