Unless you have a sizeable savings account, or an equity partner ready to share the financial burden, it’s likely that you’ll need to borrow at least some money from a bank to finance your new business.
Getting funds for a business venture can be complicated, but don’t worry too much, it’s simply a matter of being prepared. You just need to provide some important information about the profitability of your future business, to show the bank that they are making a sound investment.
3 Common Business Banking Mistakes
We’ve included a list of the kinds of financial information you’ll need to provide below, but before we get to that, here are the 3 most common pitfalls you need to avoid:
- Time Limitations: A successful loan application can take time, and often there is limited time before you have to sign on the dotted line for your sale, so make sure you process everything as quickly as possible. Don’t leave your bank interview until the last minute!
- Incomplete Applications: Bringing too little information to the interview will cause delays. It’s always better to have too much information than not enough, so make sure you have everything you think you’ll need.
- Insufficient Funds: One of the most common causes of business failure is a lack of funds. Make sure you borrow enough to get things up and running and to keep your business running day to day.
What You’ll Need to Bring to the Bank
- A tax return from the business from the last 2 years
- A profit and loss statement from the business from the last 2 years
- A current balance sheet
- Details about your personal assets and liabilities
- Information about your business qualifications
- Details about any previous business experience you have
- Information about any equity you plan to invest
- Forecasts of expected profit and loss statements for the upcoming 2 years
- Forecasts of the expected cash flow for the upcoming 2 years
HOT TIP: Buying into an existing franchised business can save you a lot of time and money during the loan process. Accredited franchises (like Kwik Kopy!) have existing relationships with financial institutions across Australia that can help expedite your loan request.