The State of Business Finance Today
I thought now would be a good time to revisit the subject and let you know where things stand today. Firstly, the good news: finance is available at very competitive rates. Lenders have money they need to invest and their staff have monthly sales targets, so they’re keen to find viable businesses they can lend to. And, with fewer and fewer businesses meeting their criteria, those that do are treated like royalty.
So, if you meet their (strict) criteria, things are looking good… especially if you know how to play the system. Now, the bad news: as you’ve probably realised, “strict criteria” means the lenders want as little risk as possible. And that means, if they think you are risky, they’ll want you to reduce that risk by offering them security and directors guarantees. And, if you can provide those, they’re usually happy to talk with you.
What they don’t want is risky ventures where the business owners aren’t sharing the risk. Those sorts of deals are simply off the table, so you have to be realistic. So, assuming you fit one of the categories they’re still interested in, how can you do to improve your chances of getting the best deal?
Here are three tips:
(1) Apply for credit in the second half of the month. The people reviewing your applications will usually be working to monthly targets and, if they short of their quotas, they’ll be more motivated to say yes to you.
(2) Run your figures past an accountant or finance broker before submitting them to a lender.
There are two reasons for this: firstly, it’s important to make a good financial first impression. Secondly, missing data from your books means delays and delays with finance can lead to cashflow problems or missed opportunities for your business.
(3) If you’re in a hurry, use a finance broker. He or she knows the market and knows the lenders… and, assuming the borrowing is possible, they should be able to get you a better deal than you could get yourself. (and in less time and with less effort)
Following these tips won’t guarantee positive results and you should always research further and consult your financial advisor when possible.