SME Access to Finance: Getting Match Fit Part Two

Simon Goldie, Director of Advocacy

In May, I wrote about the importance of SMEs being ‘match fit’ when they apply for finance. In part two, I want to address how the things businesses should think about when applying for finance.

Planning

Ideally, any business large or small should speak to a funder before making the final decision on the asset they need to obtain finance for. It is far better to discuss business plans, review the existing assets and their assumed longevity before making the decision to invest in new equipment. The funder can help the business and identify options that the business perhaps wasn’t even aware of, for example, refinancing existing assets or creating a structured finance arrangement. Early engagement with the funder can save a considerable amount of work and time for the applicant. Always check and challenge lead times on new assets with your chosen supplier. If you are seeking to replace equipment in your business which is vital to production or service delivery, it’s important to understand “lead-time”.

Applying

Over the last few years, there has been a trend towards applying online. This can work well for many lower value deals, however, once over a certain size, the funder is likely to want to discuss the businesses plan and require more detailed financial and general information than an online application can capture. This is also where timing and preparation are important. Are you producing management accounts? If so, are they monthly or quarterly? Try and have the management information you use to run your business up-to-date and ready to support your application. So, if you do apply online be prepared for the funder to follow-up with questions. This might mean the application process is longer than you had hoped.

Regulation

The funder or intermediary is obligated to go through anti-money laundering (AML) and ‘know your customer’(KYC) checks. This takes time but must be done to secure credit approval. Factor this in when applying.

Published 05 Jul 2023