British Business Bank has provided the following guidance when applying for funding.
A lack of finance can hold your business back and stop it from achieving its full potential. Here at Start Up Loans, we provide personal loans for business purposes that can help you take your business to the next level. We’ve listed the top 10 things to do before you apply for finance.
1. How prepared are you?
Do as much research on the industry you are looking to enter as you possibly can. Know the products, the competitors and how others operate. You could find important information which may require you to change your business idea, so it’s always best to know what’s happening in the market.
2. Complete a Business Plan
A business plan is a written document that describes your business. It covers objectives, strategies, sales, marketing and financial forecasts. This document can also represent your business in an application to get funding, so make sure it’s saying what you want it to say. If you’re struggling with how to structure it and what to write, we have an easy-to-use free template that explains each section clearly.
3. Review your plan – things will change
You need to be sure that what you are presenting is as up to date as possible. Remember that a Business Plan is a living document and should evolve as your business develops.
4. Complete a Cash Flow Forecast
This is a forecast of how you see your business performing financially and for anyone assessing whether to lend or grant you money, it’s their opportunity to see if you have thought everything through. So make sure you include all of your costs and your revenue streams. It’s important to be realistic. This free template can get you started.
5. How much money will you need from your business?
A Personal Survival Budget is a list of your personal finances and completing one will show you the amount that you will need to take from the business to live on. Our free Cash Flow Forecast has a Personal Survival template you can use. You may be surprised at how much you are actually spending!
6. Does your plan match up to your forecast?
Check that the numbers you mention in your business plan are in your cash flow forecast. Everything needs to tally, so make sure you check that you aren’t saying one thing in your plan and another in your cash flow.
7. Get proof of any sales and contracts
Before you forecast your sales, you could try and test trade at a market, pop-up shop or even a car boot sale to help predict the demand for your product or service. If you are going to make claims of sales or contracts in place already, you need to be able to verify them with proof. This might mean providing a copy of any contracts you have, for example.
8. Show you can manage your existing debt
If you have any bills to pay or hire purchases (are you paying for anything in instalments e.g. a car?) it’s important to show that you can maintain the repayments. This demonstrates good financial management and gives confidence that you will manage further debt well. You might also like to check your own credit rating in advance. A number of credit companies such as Experian will offer free trials which will give you details of your current credit score and how to improve it.
9. Have an exit strategy and a plan B
Not all start up businesses work out, and if you can show that you have alternative options, you will demonstrate that you are responsible and therefore improve your chances of accessing funding, especially debt.
10. Know what you’re applying for
Provide (in as much detail as you can) a breakdown of what you need the money for. Supplying quotes for equipment or work to be done is always helpful and shows that you are only looking for what you need.
If you’re not ready to apply for funding but have a great business idea, we’ve created this short guide with all the essential information you need to turn it into a reality.
