Lending Criteria Tips

As we all watch the effects of Covid 19, we thought it would be useful to give a little feedback on what lenders are looking for and the best approach.

Your first port of call should always be your high street bank as they will offer you the best rates although as we all know they are of course stringent.

Beyond those, finance houses are lending although due diligence has increased. On receipt of all completed information some lenders are still offering a facility on funds within days.

In essence the easier you/we make the finance house underwriter and credit teams’ jobs to process applications the quicker you will receive a response.

Primarily try to present all the required information at the first time of asking. Underwriters will generally process the easier applications first that give full details on a company’s standing and profile.

A clear company profile should include answers to the below:

  • Loan amount and term required

  • A clear picture on your current trading situation with any diversification plans

  • Outline how your business has been affected by the COVID-19 pandemic

  • What is the expected impact of COVID-19 on cash flow & revenue. Include any projections you have prepared

  • Provide a detailed explanation or breakdown on why you require additional funds

  • Detail how you intend to overcome this temporary loss of revenue you are experiencing

  • What is your revenue going to look like during this time?
  • Provide information including your Business Continuity Plan
  • Please detail (amount, due date, source and repayment dates) any cash injections from any other sources in next 6 months ? eg government funding, other loans, or insurance pay-outs

  • Repayment proposal (when you plan to start repayments)

It appears cumbersome but it will be time well spent if you are looking to raise finance in the current market.

Even if the picture appears negative, lenders want to see that detailed thought has been given to the current situation, the commitment involved and a proposed way forward.

Checklist of information to be included:

  • Full Company Name
  • Company Registration Number / Business Entity
  • Full name of loan applicant if different to the above
  • Email & Telephone Number
  • Company Incorporation Date
  • Trading Since (if different to the above)
  • Typical monthly sales
  • VAT Number (if applicable)
  • Number of company directors
  • Number of 25% + Shareholders
  • Directors Personal details & other
  • Need bank 3 months bank statements
  • Last 3 vat returns
  • Detailed annual accounts
  • Latest Management Information – Balance SheeT and P&l
  • Balance sheet and P&L
  • Current Aged debtor & creditor reports
  • Average debtor days where available
  • Confirmation of details of any customer concentration greater than 10%

Good luck, keep safe and do call if you would like to talk through.

BBC Article; click here – Coronavirus Impact on UK SME’s

If you are interested in finding out more about Finance Solutions, email us at: info@thebusinessboard.co.uk or call our office on 0118 338 1818.

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