EDUCATE
LENDING A
HAND HENRY E JDELBAUM, M A N AG I N G D I R EC TO R FO R A S C F I N A N C E F O R BUSINESS, SHARES W H AT L E N D E R S A R E LO O K I N G FO R W H E N YO U A P P LY FO R B U S I N E S S F I N A N C E
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ith hundreds of different variables that go into any given bespoke business loan, putting an application for finance together can be an exercise in frustration for a landscaping business. You can’t put the application together without knowing what the bank wants, but they won’t tell you until the application is in! So, what is a lender actually going to want to know about?
1 You! It sounds obvious, but it’s an easily-missed part of an application; lenders want to know about the applicant. When a lender loans money, they want to have confidence that you will repay the
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loan. If they don’t feel that you’re going to use the finance wisely, then they aren’t going to take the risk. A lender wants to see that you and your team have the experience needed to run an effective business in your sector, with all the qualifications needed to avoid running afoul of any regulatory issues secured or being sorted out ahead of time, and the drive to make sure that your business is going to be a success.
2 The financials As we mentioned, a lender wants to be sure you can repay the loan. To do that, they need to look at the financial situation of your business and how much money you’re making. This also applies if you’re looking at buying an existing business – lenders will want to see the financials of both the business you’re buying and your existing business, if applicable. It’s important to note here that lenders are usually only going to be looking at the existing financials. Lenders aren’t too interested in projections of future turnover or potential profits. They want to be sure that you’ll be able to pay the loan back at the level you’re currently trading at, not solely relying on you to make sure your business grows enough to afford the repayments.
3 The security Whilst the above points are key in determining whether you can get a loan, security is much more about the realities of said loan. Whilst unsecured loan options are available for very strong performers, having property available
as security for your loan is going to make your application much more palatable to lenders and open up more options for financing. Your security is also going to have a notable effect on how much finance you’ll be able to borrow. Lenders operate on a principle of “loan-to-value”, where the amount of finance they’ll offer you maxes out at around 75% of the value of your security.
WHEN A LENDER LOANS MONEY, THEY WANT TO HAVE CONFIDENCE THAT YOU WILL REPAY THE LOAN In a world where everything is bespoke, you can’t make exact predictions on what lenders will want to know, but every loan will include at least these three elements. Of course, now that you know what lenders are looking at, this begets a second question – what are you looking for? That’s a much harder question to answer – and one that needs the expert assistance of a professional. Any small business looking for finance will face difficulties figuring out what works best for them – after all, your job is to be an expert landscaper, not a financier. A broker, however, is just that. They can do many things to make your application easier, using the years of experience in finance that you don’t have to help identify and tailor your application to the right solution for your particular business.
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