What lenders need to know
Any lender will want to be sure that your business is on a sound financial footing before agreeing to commercial funding.
A lender's key concerns are that:
- you will be able to repay the money
- the security you are offering is worth enough to cover the amount borrowed if you default
Do not over-estimate the value of your security. A lender will almost certainly appoint a surveyor or property appraiser to inspect and estimate the value of any property offered as security.
You will be asked to provide information about your business' financial performance, which will probably include:
- audited accounts for the last two years
- indications of current performance, mainly through management accounts from the last financial year end
- projections (cash-flow, profit & loss and balance sheet) for the next two years
- business bank statements for the previous six months
- CVs or profiles of each partner or director in your business
- asset and liability statements for each applicant
- a business plan showing how the property will contribute to your cashflow and how you intend to repay the loan
If you are buying a business and property combined, it is likely you will need to supply the lender with additional information, such as:
- why the business is being sold
- details of any personal contribution there might be
- details of the financial performance of the business being bought (annual accounts)
- projections on how the business is expected to grow
Bear in mind that you will almost certainly need to find a deposit of between 20 to 30 per cent of the purchase price of the property.