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Financing | Blog | Business Advice

The 2024 Guide to Preparing Your Business for Financing

By J Leighton

|

April 16, 2024

Whether your business is a humble start-up or nearing unicorn status, you will inevitably need financing at one point or another to achieve the next stage of your growth. 

If you want to take your business to the next level by purchasing new equipment, expanding your team, or even leasing new premises, here’s the inside guide to ensuring that you are 100% prepared for a successful financing application. 

What kind of financing is best for your business? 

If you’re in the business funding market, you’re likely looking at solutions from traditional finance institutions and alternative lenders. There are some fundamental differences between these sources of financing — reviewing these differences is the first step to making an informed decision about what kind of financing is best for this stage of your company’s growth and how to prepare your business for a successful application in either scenario. 

How to prepare your business for traditional financing 

Step 1: 

If you’re going to try applying for traditional business financing, then you ought to be prepared for a lengthy and demanding application process. Applying through a traditional financial institution entails sourcing and preparing a large amount of paperwork, including: 

  • A basic business plan; sometimes, applications will require the submission of a secondary business plan that details how you plan to cover the cost of finance
  • Cash flow projections 
  • A list of outstanding debtors 
  • Up-to-date management accounts 
  • The most recent annual financial statements 
  • The latest VAT statements 
  • Tax clearance certificates
  • Bank statements from the last three to six months 
  • Copies of personal documents, including your ID and marriage certificates (if certain personal assets are on the line as collateral) 
  • Business documents, including registration documents, the office lease, shareholder documents, proof of address, accreditations, and more 

It can take weeks or months for lenders to review and verify these application materials, so be prepared to wait a while before you hear the outcome of your application. 

Step Two: 

Once you’ve got your supporting documentation in place, there’s filling out the application form itself. Each application will need to be tailored to the prospective financial provider so that it aligns with the funding opportunities they are looking for. 

Step Three: 

Next, you’ve got to think about collateral. These are the secondary assets that you’ll pledge as security against the loan. Any kind of asset can be pledged as collateral, but typically they tend to be in the form of equipment, real estate, or inventory. In the event of a default, traditional lenders may seize and sell the collateral to recover the cost of the loan. 

Step Four: 

Finally, to prepare your business for traditional financing, it’s a good idea to ask about any potential costs that could arise after the loan has been approved so that you can work out your capacity to cover these costs. These can include application fees (which are incurred whether the application is successful or not) and early settlement penalties.

How to prepare your business for alternative financing 

Tired of reading yet? Don’t worry, this section is a lot shorter. 

That’s because alternative lenders like Bridgement don’t require the submission of piles of supporting documents and lengthy application forms to inform financing decisions. Instead, we leverage the power of secure, innovative financial technology to make the process much simpler and much faster. 

Step One 

Take two minutes to fill out the online application form. 

Step Two 

Bridgement will plug into your cloud-based accounting platform (like Xero or Sage) to securely review your financial data and determine your credit options in a matter of hours instead of weeks. If you don’t use accounting software, don’t sweat it — simply submit PDFs of the relevant financial data instead. 

Step Three

There’s hardly a need for a third step, really. You can sit back and relax. There aren’t any hidden requirements, future costs, or early settlement penalties around the corner. Quite the opposite — if you settle your account sooner than expected, we’ll reward you with a discount. 

With Bridgement, what you see is what you get. We even have a commitment-free loan repayment calculator that you can use to estimate your cost of finance upfront. 

Access financing in 24 hours or less 

On the whole, traditional financing solutions are best suited to businesses that have enough time and assets available to weather the application process. The alternative financing solutions available from Bridgement are best suited for growing businesses seeking flexible financing to improve cash flow and achieve short-term growth, especially when they don’t have collateral assets to spare.

Apply online in 2 minutes and access up to R5 million in business funding in less than 24 hours.  

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