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Spring Advisory Services CEO. Unlocking growth through financial, management & strategic consulting, backed by 25 years of PE experience.

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At every size, growing your business takes investment. You put in time developing products, building your customer base and providing great service day in and day out, but the next stage often needs new equipment, another location or a bigger team. As long as you’re profitable, a loan or line of credit can be a perfect solution because borrowing lets you retain full control of the business and, in the long run, is less expensive than taking on an investor. No matter the lender, there are a few documents owners need to prepare before they can apply.

Depending on the size of your business, you may need to provide a personal guarantee or pledge the stock of the business as collateral, but if you have faith in your company, taking on some debt is a good option to help finance the company.


1. Quarterly Profit And Loss Statement 

Lenders want to know if you’re making enough money to pay back the loan and interest. Three years of historical quarterly financial statements, specifically profit and loss/income statements, shows that capability over several years, reassuring the lender that your business can meet those obligations in every season.

2. A Realistic Forecast

Building on the historical profit and loss, you need to come prepared with a realistic forecast for how the business will perform over the next few years. If the loan is for a new location or to develop a line of products, this is where you can show the potential from the investment. It’s important to be as realistic as possible in your projections and demonstrate that your plans are compelling and grounded in reality. We suggest business owners prepare a “bottom-up” plan that has some detail on existing customers and potential new ones. This can then become an internal tool that you can use as a sales plan with tangible goals to go after.



3. Aged Accounts Receivable Balance

The quality of your customer accounts and your collection abilities is important to lenders. In addition to demonstrating that you have good follow-through, your accounts receivable can also show value for your business and provide a marketable asset as you discuss your loan terms.

Make sure to note the age of the balances and produce an accounts receivable aging report. This analysis is frequently included in accounting software, but if not, the process is relatively straightforward. Make use of a helpful template to look at how old your balances are, and group them in increments of 30 days.

4. Aged Accounts Payable Balance

Similar to the analysis above, an accounts payable aging report shows monetary balances and their ages. In this case, the amounts owed are from your business to your vendors. Establishing how much money you will pay in the near future gives lenders insight into your cash position between financial statements. Additionally, these balances can shed light on your business practices by showing how you treat your payments to those who do business with you.

5. Audited Financial Statements

Audited financial statements are the gold standard for making lenders comfortable with the information you provide. They require preparation by a certified public accountant and adherence to the generally accepted accounting principles that are important for every business to know. The stamp of approval that these require makes your case all the more compelling because another professional is lending their name and reputation to your numbers. Consider hiring an accountant to perform a quality of earnings report if an audit is too costly. 

6. Tax Returns

Often this is one of the only official documents a small business may have that indicates that your business is in good standing and pays what it owes to the U.S. government. The details on the return, such as revenues, cost of goods and operating expenses, validate the information on your profit and loss statement.

7. Ownership Schedule

Showing who owns your business helps lenders evaluate who is going to control the loan once it’s dispersed. This helps them get comfortable with your operations and can provide more options when figuring out what assets and promises can guarantee the loan. For all the owners of the business, the loan will be important information because each one has a stake in the outcome.

Putting together these documents will take some effort, but it’s well worth the time. Beyond accessing the investment you need to take your business to the next level, understanding your financial performance and putting plans on paper will chart how you’re performing over time and can show facets of your business in a new light in terms of the profits or problems they cause. It may be helpful to go over these documents with a professional business consultant for a dry run before taking them to your lender.

SME Finance

If you are an SME or Sole-trader looking for finance to expand you business get in touch today.

We have the finance solution to meet your requirements.

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SME Finance Solutions
Ballybane Enterprise Centre

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Contact Sean: 089 955 3464

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