2020 Strategy: MONEY MATTERS
Loan application paperwork can be confusing. Read our expert advice to getting it right.
WHAT DOES 2020 HOLD FOR YOUR BUSINESS? EXPANSION? RENOVATION? RECRUITMENT? OR JUST PLAIN OLD WORLD DOMINATION? WHATEVER YOU HAVE IN MIND, OUR EXPERT ADVICE ACROSS FINANCE, SOCIAL MEDIA, STRATEGY, AND TEAM MANAGEMENT WILL HELP YOU MAKE IT YOUR BEST YEAR YET.
If expansion is on the horizon for 2020, access to funding shouldn’t be a barrier. We ask the experts at Microfinance Ireland (MFI) a not-for-profit lender, for their tips to getting your pitch right.
What is the most important advice you have for any small business owner wishing to access finance for their business?
When applying for a business loan from any lender, you need to convince them that you:
Have a solid or good business idea.
Understand the business fully
Are a business owner that is worthy of support.
As part of MFI’s credit assessment, evaluation of the business owner or promoter is of the utmost importance.
Does the promoter have the industry experience, knowledge, skills and resilience to run a successful business?
Also having a good understanding of your business, for example, the target market, local competition, unique selling point (USP), pricing structure, margins, cash flow and so on are extremely important and will enable you to ‘sell your story’ with a potential lender/funder.
A concise business plan supported by realistic cash flow projections and a clear outline of the purpose of the funding along with demonstrating your ability to repay is essential to obtain funding successfully for your business.
What are the most common mistakes made by small businesses when applying for a loan to Microfinance Ireland?
Some common mistakes include:
Failing to describe your business in a short yet simple business plan is probably the biggest weakness that we see from applicants on a regular basis. Make sure you answer the following questions as part of your business plan:
Who you are
What your business does
How you will operate/make it a success
Why you need the finance
The business owner/promoter does not undertake adequate research in the market and the potential for their product or service. Particularly with startups in the hairdressing sector, there is a risk that where there is strong established competition, it may be difficult to successfully compete and build up a strong client base.
Not providing financial information that is realistic - if you are starting out, consider how long will it take you to get established and even then, what is realistic turnover to generate in one day, one week, one month. If you are already established, showing that you have a good understanding of the key financial drivers in your business (turnovers, customers, costs, margins) and good financial information provided can inspire confidence with a potential funder.
How should you prepare your loan application?
When applying to Microfinance Ireland, visit their website www.microfinanceireland.ie and register your details or check out the necessary documentation/templates required for an application.
Alternatively, visit your Local Enterprise Office and they can provide help and guidance with your application. Other than the business plan section, the majority of what is required is information or documentation a business owner should readily have.
Complete the application and make sure you provide all the other necessary information (e.g. financial information, bank statements etc) and email or post it all to Microfinance Ireland.
See www.microfinanceireland.ie for more information