When you need money to expand

When you roll up to a commercial banker looking for some extra dollars to finance your latest business idea there are some must haves that need to be included in your application.

It may be a nerve-racking experience but remember – you are
their customer and if your present a strong case they are more likely to sell
you financing.

Financers want to minimise their risk, which means
businesses need to prove they can re-pay debt.

frequently prepares reports for clients who require financing for a new
venture, such as buying a franchise or starting a new business.

Head honcho, Kirsten Hawke says many established businesses
also seek financing for plant upgrades and new equipment that improves
performance and productivity.

Three standard
reports financiers require

When a potential lender or investor is reviewing your
business proposal, they will review the numbers to assess the level of risk and
the opportunities for success.

For an existing business, they look for things that don’t
add up, like why are sales low during one time period in comparison to a
previous year.

And, trying to minimise tax payments by paying non-business
expenses with your company and hiding cash sales will not help your case when
applying for finance.

You need to have a good understanding of the story your
financial reports tell an outsider and explanations for any anomalies.

Financiers will always require the following reports:

Profit and loss

Balance sheet of assets and liabilities

Cash flow forecast

The beauty of using software such as Xero means these
reports can be generated quickly, but your accountant will need
to ensure all transactions are included and correct.

A New Zealand business should have at least a 20 per cent
return on investment (ROI) and some investors will be looking for nearer to 30
per cent.

Buying a new business requires you to conduct due diligence and
BUSINESS buddy can review a
business’s performance before you buy it.

If you are launching a start-up you must have forecasts of
profitability and cash flow.

Budget and business

Financial organisations look for evidence of planning.

They will expect you to have a budget and will review how
closely you stuck to it in previous years. This gives them an insight in to
your management skills.

A business plan gives them the confidence that you are
thinking about the direction your company is taking and have long-term goals.

Personal investment

A bank business manager wants to know you are prepared to
invest in your own company, which often requires raising a mortgage on your

If you have funds hidden away, you should reconsider where
they are invested because it makes sense that you support your business venture
before someone else’s.


You need an asset that gives a financer security, that is,
the knowledge that there is something the can sell should you fail to meet loan

Business collateral could be your home, a boat, a vehicle or

Your history

Lenders are going to do some digging on your background, and
they will run a credit check to make sure you pay back any former loans or meet
commitment to rental agreements.

It is also likely they will do a Google search, looking for
evidence of your existence, lifestyle and other interests.

If you don’t have a digital footprint, you can build one by
putting your name on your company website with your bio, or you can open a LinkedIn

And, if you have dodgy stuff on Facebook – it is essential
to remove it.

Do a Google search of yourself and see what you find.

You could be surprised to find old newspaper stories, sports
results, photos, work you do with not-for-profit organisations – all building
your story.

You should have some good references you can call on to
vouch for your good character and business reliability.

References could be from a landlord or a business supplier.

BUSINESS buddy is
happy to help you prepare information for loan applications.

Give us a call at 0800 283 399 if you need advice about
making 2019 your year for big things.