Applying and then being rejected for equipment finance or loans for your business can be disappointing and frustrating, not to mention time consuming, even more so in the current climate. This is why we are encouraging our businesses to follow the correct process and work with us to process their applications efficiently and have a better chance of securing the best deal possible.
It’s safe to say that lenders do not need an excuse to turn down applications, which means your application needs to tick every box, cross every ‘t’ and dot every ‘i’, in order to give you the best possible chance. Our job is to help you, so here are some of our top tips on how to get approved for finance.
Have a target outcome in mind
Lenders will either provide finance for your equipment, to help support your business and its operations, selling to customers, such as a frying range for a chip shop, oven for a restaurant or squat rack for a gym. However, you may require a business loan, which may support your business by helping to invest in equipment, stabilise cash flow as well as giving you money for a rainy day. By establishing which of these two target outcomes is suitable for you and your business, you can ensure you get the right finance for the right reasons, giving your business the best time of investment.
Get the right equipment
Most lenders prefer equipment in a good condition from a recognised supplier, such as those we work with at Johnson Reed. The finance for your equipment will be secured against the value of the asset, therefore the working condition, type and origin of the equipment will help to reassure the lender that it can help your business, whether its use is directly or indirectly connected to turnover, in order to be sure your business can repay the finance. This gives the lender confidence in your business and the investment.
Have a rationale
Your business is more likely to be accepted for finance if you have a clear rationale or business plan for the purchase. By answering the following questions:
What is the finance for?
How will it be used?
How will it benefit your business
How will it help you generate turnover?
the lender will be able to clearly see the plan for the business, how it can generate revenue using the finance, giving confidence to the lender to accept your rationale and confidence that you can make repayments. Being prepared and knowing your business inside out, as of course you do, is exactly how you can you can boost your chances to secure that all important investment for your business.
Check your credit score and documents
By having your credit score in order (we use Experian), with updated history, addresses, details and information, as well as any documents ready-to-hand. Having information and documents such as bank statements, accounts, ID and rationale for investment can all help to ensure your application is processed quickly and efficiently, without delays or hesitation from the lender.
Think like an underwriter
You need to install confidence in underwriters when applying for finance. They are paid to assess your application by scrutinising every aspect of it, to establish whether there are any doubts about you or your business, and its ability to succeed in repaying the finance that you need. Therefore, it makes sense to think like one, try and visualise what they are thinking when processing your application. Are you presenting the best case for your business to be approved? Are you presenting a clear rationale, with up-to-date documents and reasoning behind any questions they have regarding your business? The answer to these questions needs to be ‘yes’ to give your business the best chance.