Technologies can aid businesses in applying for finance and some of them are more common than you might expect. In fact, there is a whole range of well-known technologies that you could be using to improve your finance application, which will also improve your chances of success.
Liaising with your accountant
When it comes to applying for finance, there really is no one better to advise you than your accountant. Firstly, these professionals are often ranked as business’s most trusted advisors. Also, they have a clear understanding of your business’s current financial position, how it performed in the past and how it will perform in the future. The problem many businesses face is that an accountant’s time is money. Therefore, to build a funding application and put it in front of a number of lenders, can cost a lot. However, this problem is made a lot less challenging with the help of software as a service. Collaboration between a business and its accountant is a lot easier with software as a service, as these applications can be accessed via the internet rather than via an individual computer. Web services that you’ve probably already heard of, like Google docs or Dropbox, work in exactly this way and can help you and your advisors to share and update the documents required for a funding request from multiple locations, as and when necessary.
Building a business plan
A business plan is a key part of a best practice financing request. It lets lenders see the structures, employees, products and assets of a business. It also gives them a clear idea of what the business wants to use the money for, what financial product would suit the business and whether they’ll get their money back. Worryingly though, recent research by Sage suggested that only 1 in 10 small firms use their business plan to secure finance or funding. Building a business plan can be an arduous task when you don’t know what information is needed or whether it’s being presented in the right way. One of the best ways to take the pain out of building a business plan is to incorporate data from existing well-known online technologies. For example, when describing key employees in a business, why not include a link to the individual’s LinkedIn profile? LinkedIn is a network of 150 million people worldwide and will be trusted by the person assessing your funding application. Other examples of using existing information are referencing a manufacturer’s website or a property website when describing business assets. All this information will be useful to lenders so don’t be afraid to include it.
Submitting financial information
Lenders will always want to see a range of financial information about your business. This will include information about your past performance and your future forecasts because they need to see whether you’ll be able to pay the money back and whether your plans for doing so add up. Businesses often struggle to understand what information is required and also find that compiling this information, usually with the help of an accountant, can be time consuming and costly. Our own approach to tackling this problem is by automatically building the financial statements that lenders need from the data in a business’s accounting software. This takes the time and effort out of the process and also ensures the information is in the precise format that lenders require.
Many existing accounting software, such as Sage or QuickBooks, can build financial statements that are appropriate for funding requests too. As these software applications have developed to incorporate more online product offerings, it has also become easier for businesses and accountants to collaborate in producing these statements. Businesses should be using these tools to generate the financial information that lenders require.
Exploring your funding options
There is widespread agreement that a key part of improving SME finance is increasing the number of finance options available to businesses. Not only is more choice required but also more signposting towards the different choices. Businesses are too often put off at their first attempt of applying for finance because they aren’t aware of the choices available. While we try to help to businesses access a wide range of products and providers through our service, there are a lot of completely new lenders that businesses can already reach. Collectively referred to as alternative lenders, these include peer-to-peer lending sites like Funding Circle or online market places like Market Invoice. Also, referencing the chairman of the non-bank lending taskforce once again, Tim Breedon believes that new entrants such as pension funds and institutional investors will soon supplement these existing alternatives. Such alternative sources of finance have gained a lot of ground in recent months and could provide exactly the right fit for your business.
To summarise, businesses shouldn’t be put off from applying for finance because they think the process involved will be too difficult. Many technologies that they already use or are familiar with can help to make applying for finance much quicker and simpler than they’d expect. Used in collaboration with a trusted business advisor, such as an accountant, these tools can improve the process of applying for finance as well as the chances of finding the funding option a business needs.
This article was written by Joe Carstairs on behalf of Funding Options.
Funding Options is an online service to allow businesses to produce a best practice financing request, helping them to access a range of finance products and providers so they can compare quotes and find the best fit for them.