Securing funding for your business can be an essential step towards growth and expansion. Whether you’re an entrepreneur starting out or an established company looking to elevate your operations, the process of obtaining a business loan can seem daunting. However, with the right guidance and approach, it’s entirely achievable. At Gallagher Keane, we understand the complexities of the financial sector, and we’re here to offer invaluable insights and tips to assist you in navigating the journey to securing a business loan successfully. 

Understanding Your Options:

Traditionally, banks have been the primary source of business loans for many entrepreneurs and companies in Ireland. However, the financial sector has evolved, and today, there are various other options available to businesses seeking financing. From alternative lenders to government-backed schemes, exploring all available avenues is essential.  

Preparation is Key:

Before applying for a loan, it’s essential to ensure that your business is well-prepared to handle funds and that you have clear plans outlining how it will be utilised. 

Boosting your chances of loan approval involves demonstrating proactive measures taken to manage your business’s expenses effectively. This includes capitalising on available government grants tailored to businesses of various sizes and sectors, along with ensuring that overhead costs such as rent are competitive for your area. 

Diversifying your revenue can improve your application. Having multiple income sources, even if they consist of a diverse range of regular customers, showcases the resilience of your business in the event of a sudden loss of significant revenue. 

Additionally, outlining the intended use of the loan funds is crucial. Banks and finance providers often have specialists who can offer guidance on optimising your plans to maximise the benefits for your business. 

Financial Health Check:

Banks and finance providers require evidence that your business can meet its monthly loan repayments without causing strain, they will examine various aspects of your business’s financial health when evaluating your loan application. Several factors are considered during the application process, including: 

• Consistent incoming payments from customers into the business account. 
• A growing or stable turnover over recent months. 
• Prudent management of business overdrafts, maintaining a credit balance for at least 30 days per calendar year. 
• Timely tax payments to the Revenue, along with prompt repayment of suppliers, existing credit cards, or loans. 
• Sufficient funds in the business account to cover payments without bouncing cheques or direct debits. 
• For applications to banks, personal accounts of sole traders or accounts of owners/directors in limited companies may also undergo review. 

All figures provided in the application must be accurate, including turnover figures. Banks or loan providers verify such details before approving or rejecting a loan application. Additionally, transparency regarding any existing loans is crucial for a comprehensive assessment. 

Documentation Requirements:

While each bank and funding provider may have slightly different requirements for loan applications, there are some common documents typically needed: 

If you’re applying for a business loan from a bank where you’re already a customer, you may only need to fill out an application form, though additional documents might still be requested. However, in our experience you will require the following:

Company Biography and Profile: 

• History & Business Model / background of the business  
• Uses of Funds.  
• Management Biography including key management/ position roles.   

Financials:  

• Audited/Certified accounts for the past 3 years. 
• Most up to date Management Accounts  
• P&L and B/S Projections – for the next 3 year. 
• Full Cashflow projections for next 36 months 
• Details of capital expenditure spend over the past three years and projected for the next 3 years. 
• Up to date Debtors & Creditors listing. 
• Breakdown of various revenue streams and gross margin analysis for each of revenue streams – for historic 3 years. 
• Confirmation of Product/Sales Mix  

Key Competitors in the Market:  

• Who are the key competitors and how do you differentiate yourselves from your competitors?