Funding ready? Here are the 7 items to be finance fit.

As we head into 2022, at the time of writing, we’re all thinking about plans and goals for next year. In fact it’s almost all we hear about at networking events!

So – How will you fund your future plans and make sure your business is everything it can be?

There are a whole host of business finance options available through your advisor but if you’re application ready then you’ll get better lending terms from a wider selection of lenders.

By keeping an up to date pack for your business, when an opportunity arises either within your plan for the year or out of the blue, you’ll be able to make the most of it.

Here’s what your basic business finance pack includes;

  • An Assets, Liabilities, Income and Expenditure (ALIE) form.
  • Business accounts, go back three years if you’ve been established that long and from the end of your last, keep management accounts and VAT returns.
  • Up to date bank statements.
  • Other statements and supporting information.
  • A copy of your credit file.
  • Your previous experience with similar projects.
  • business plan.

ALIE (Statement of Assets, Liabilities, Income & Expenditure)

Most lending institutions will want to see at least part of this information, often they will require all of it.

It’s easy to maintain a record of your financial information, much more difficult to have to produce it in a few hours to jump on an incredible business opportunity!

The easiest way to maintain this is to download a spreadsheet with the required information. The spreadsheet can be kept up to date whenever things change.

It’s also great personally to see where all your hard earned money is going!

Download ALIE templateContact us and get FUNDED!

Bank statements

Most term lenders in the property space will expect to see your most recent three months’ bank statements as part of your application, so, if you’re expecting to need any sort of buy to let mortgagecommercial investment mortgage or commercial owner-occupied mortgage then it’s always good practice to keep the latest statements on file.

Some bridging lenders will also like to see bank statements as part of their application process so even if you’re not expecting to need a term product it’s still good to keep them on file.

If you have multiple accounts, personal and business or you have your properties in an SPV (limited company or other vehicle) then keep statements for all your current accounts, just in case they are required.

If you’re purchasing property we might need to prove where your deposit is coming from, so if you’ve built up savings over some months or years, it can be worth keeping more statements on hand to show this.

Other statements

As part of the underwriting process lenders will need, at the very least;

  • Proof of your identity ~ Some form of photo identity – passport or driving licence for most applicants although other documents are sometimes acceptable.
  • Proof of address ~ To prove your residential address, a recent utility bill, council tax bill or HMRC statement or letter is generally required, if you’ve not used your driving licence for proof of ID then it can sometimes be used here too.
  • If you have other mortgages or loans then keep the most recent statements here just in case they are required.
  • Evidence of other statements made on the forms, so if you are employed, keep your latest P60 and payslips, if you are on Self Assessment then your latest tax return and calculation.
  • Any other documents you think might affect a lenders view, keep them handy so if they are ever needed, they are available.

Credit file

Although many bridging lenders and some buy to let lenders are less worried about your credit history, maintaining a good score and overall record is good practice in general and will help in all sorts of financial requirements.

Firstly, sign up to one of the free (or premium if you prefer) credit check sites and look at your whole record as well as your score. Secondly it’s good to concentrate on maximising your score but that’s not the whole picture from a commercial point of view.

Why that’s the case – Commercial lenders will often look at your payment record rather than just your score, therefore keep an eye on all your credit agreements and ensure you’re always able to maintain the payments. Have credit card payments on direct debit even if just for the minimum payment and try to make sure you never miss a payment.

We can’t always maintain a perfect record though. So if you ever do miss a payment there are things you can do to minimise the impact on future applications. Firstly, try to make up the payment as soon as possible, that way it might not even appear on your record. If it does it will show as a one off. Secondly, keep a record of what happened, when and why. That will be useful if an underwriter needs more details.

CCJs (County Court Judgements) or Decrees in Scotland, Bankruptcies, repossessions or other adverse events can be dealt with if we know about them. Some lenders need clean credit whereas others don’t. So – maintain those records and we’ll work together to get your business working for you.

Previous experience

If you’re planning to build out a major development then it will give the lender more confidence if they think they know what you’re doing!

So – whatever projects you work on, keep a record of your involvement, how the project went and the profitability.

If you can add photos to your portfolio, all the better!

Business plan

Property is a business and all businesses should be planned to some extent!

So – have a plan written down, even in basic form. That way you’ll have a better idea of the opportunities to aim for. What a good opportunity looks like and how you’ll make the most of them.

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