1 – They only approach the WRONG bank!
The vast majority of small business owners, more than 60% of them only approach a single lender with their borrowing requirements or business plan.
This would not be a problem if all banks were equal and had the same lending policies as each other, or if lending policy was devolved locally as it was fifty years ago when the local bank manager knew all his customers and what they could afford to repay.
For better or for worse that world no longer exists and there are a plethora of lenders out there all aiming to help small business but in different ways and with different policies. Apart from the growing number of high street banks there are challenger banks, crowd-lenders and many other small specialist business lenders. We have access to around 250 different lending institutions in 2018.
The expectation, however, that “the bank” will be the best for the job and that their advice around your business still persists.
There are no figures on how many businesses never get off the ground due to lack of the best advice around business finance but you can bet it’s in the thousands every year.
2 – They are not ready to apply
Having been funding businesses for over 21 years (have a look at this old press article from 1999 if you don’t believe me!) I’ve seen many finance applications come in which are “half-baked.”
It’s not a problem to send us an application bit-by-bit as with our experience we generally know what each lender is going to request and we work with our clients to get that information before putting the application in. In the case of a direct application this can mean your case is sitting on the lender’s desk for weeks before being actioned.
There’s a saying in banking – the most successful applications are those which spend the least time on an underwriters desk.
Working with professionals is the best way to streamline your finance application.
3 – They try to hide the negatives
Over time banks and other lenders learn what sort of businesses are the most likely to repay them, and, conversely, which are the ones least likely to. Trying to appear to be one of the former when you know you are one of the latter is a difficult task only achieved by the very best fraudsters.
If that’s not you (and it’s certainly not me) then there are two answers to dealing with the weaknesses in your finance application;
- Confront the problem – Be honest about what’s happened
- Show that you’ve learnt – What are you doing differently now? Can you evidence it?
It might be that the finance provider is a “tier 2” lender or the solution is different to what you had originally envisaged but if it moves your business forward then it’s the right option for the time.
4 – Not explaining why.
The finance provider needs to be in no doubt what the funds are for, exactly how you are going to use them and how the business will grow as a result.
This is where a well-written business plan comes in, it helps the lender to understand why they should lend to your business and how they will get their money back from you.
It doesn’t always need to be a huge volume – just get the main points across using as much (or as little) space as you need.
5 – Applying too late.
When a cash-flow or other finance emergency occurs the key to success is to address the problem as soon as possible. (See here)
Once you are aware that there is (or will be) a problem then prompt action means the choice of lenders is greater and the potential funding will be better – cheaper or more able to meet your needs.
Our experience of 20 years making purchases happen
Our award-winning approach to business and property finance
Our 5* customer service
We understand your problem, then help the lender to understand.
Don’t just take our word for it
acorn.finance is an award winning finance broker, here are a few testimonials from our clients;
UK Commercial Mortgage Broker of the Year – 2016, 2015 & 2014. (M&I International)
Commercial Mortgage Broker of the Year – 2013 (Business Moneyfacts)
Shortlisted – Commercial Mortgage Broker of the Year – 2014 & 2015 (Business Moneyfacts)
Acorn Commercial Finance (Acorn.finance) is authorised and regulated by the Financial Conduct Authority (FCA) – #660207
We are also full members of the National Association of Commercial Finance Brokers.
Although most of the commercial mortgages, business loans, buy to let mortgages, bridging finance and property development loans acorn.finance arrange are not regulated by the Financial Conduct Authority we take our responsibilities as a professional broker very seriously and apply the highest standards of customer service and advice to every case, regulated or not.
As members of the NACFB since 1997, our ethos has always been to adhere to their Code of Practice in every aspect of our business.
The NACFB has operated an industry recognised Code of Practice since 1992 which endorses best practice in the industry. All NACFB brokers agree to abide by the Code of Practice which ensures that you have the guarantee that Acorn.finance will always operate professionally and in your best interest.