How to Get a Yes When Applying for a Business Loan

Tom Malley FCCATom Malley FCCA

Tom Malley FCCA

Most of the work is complete. Now all you need to do is not snatch defeat from the jaws of victory.

If You Want Success Be Honest

Tell the whole story. Do not try to hide anything, ever.

There will always be items and events requiring a narrative that the numbers alone cannot provide. If you want success you should be open and honest.

The lender will look for inconsistencies in your story when reviewing your application. In his credit committee days the author always did as it is the most obvious place to start.

There were even times when the author didn't need to review the application as the applicant had been successful in self-sabotage before it was reviewed!

Lenders will be buying your integrity first. If your behavior or lack of disclosure leads lenders to question your integrity, you will not get a loan. That is your quickest route to a ’no- please never come back’.

Business Loan Application

The author’s preference is that an application is accompanied by:

  • Historic actual financial information.
  • Forecast future financial information that is formula-driven in excel.

During the author’s credit committee days, he always experienced immediate peace of mind when the application was provided with the above instead of just a summary pdf.

The author argues the quickest way to get respect is to have this available, and the quickest way of getting to a ‘come back later’ or a ‘no’ is to not have this available.

More than once and for seven-figure loans, the author has witnessed credit applications destroyed because columns and rows didn’t add up to stated totals. Welcome to your quickest route to a come back later or a no served alongside a big dollop of humiliation.

Just put yourself in the lender’s shoes: would you lend millions of pounds to a business if they don't provide numbers that add up?

How does your forecast compare to your actuals? The author was often frustrated by seeing hockey stick revenue forecasts without an accompanying explanation for the growth. An example of a basic that so many applicants get wrong. What do you think a lender will think? Best case you’ll get a ‘come back later’.

Or seeing forecast sales growth justified because marketing spend is forecast to increase. You must do more than this. You must provide a better narrative. Include an analysis of historic client acquisition cost and an estimated lifetime value, demonstrating that you can expect a positive contribution from this plan.

Then go on to validate your marketing strategy. Is it a strategy that is tried and tested? Can it reasonably be expected to handle the scale you are forecasting? If so you might not even get the dreaded revenue growth justification question let alone have to answer it!

Just preparing your application with the above few points in mind will increase your chance of getting a yes massively. The soft explanation of strategy here is what sells you, not your numbers.