Business Financing Application – Key Components

“Here Are Three Key Components That Should Be Present In Every Business Financing Application”

I’ve written before how a business financing application has everything to do with the story.

Today I’m going to take that one step further and talk about the three main components of the story and how they collectively wrap and tie all the other information together.

When I worked in the corporate world, any time I had to report on the overall health of the business at a given point in time, the higher ups always wanted to know three things:

Where are we at right now?
How did we get here?
Where are we going?

These are the same three questions that any serious lender or investor is going to want answered as well. So instead of just throwing a bunch of paper at them in the hope they get what they need, the process is a lot more effective if every element of a business financing application package is linked into the answer to one of these three questions.

For instance, the answer to “where are we at right now” is centered in the current financial statements, appraisals, estimates, quotations, bank statements, and so on that reflect the here and now.

“How did we get there” is partially answered by the historical financial statements of periods past. And “where are we going” is partially covered off by financial projections.

All the numerical reporting and projections are tied together from past, present, and future by the overall story.

Like any good story, the information has to flow from beginning and lead the reader in the right direction versus confusing the heck out of them or causing them to become frustrated with inconsistent information that leaves them unsure of what’s really going on.

But to really make the overall business financing story holds water, it must address all three questions and make sure the answers to any one do not contradict the answers to the others.

A well written business financing application is not going to assure that you’re getting the capital you’re after, but it will increase the probability of the lender or investor clearly understanding not only your request but the supporting information, which can be a major challenge in and of itself.

Next time you’re putting a business financing application together, take a few minutes to review it when you’re finished and see if you’ve answered each of the three questions. If you haven’t covered them off sufficiently you should consider taking a bit more time and tying up all the loose ends before submitting your request.

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About the Author Brent Finlay