Keys to success: tips for getting a business loan in Ireland

Keys to success: tips for getting a business loan in Ireland

By: Damien
24 Aug, 2022
If you are thinking about growing your business and taking out a business loan to do so, follow our tips to ensure you have the best chance of making a successful application.

For many businesses, from start-ups to established companies, business loans are one of the most common ways of raising finance to help the business to grow.

Loans come in many forms, depending on the size of the company and what the money will be used for – such as moving to new premises, buying equipment, acquiring another business or just buying up stock. The only constant is that the loan will need to be paid back by the business over a period of time.

Getting a loan is not always easy, and business owners – especially entrepreneurs starting up a business – need to be careful in how they make their applications to give themselves the best chance of success.

This article will outline some hints for businesses when making an application for a loan. Of course, it is always a good idea to get advice from professionals when you are planning to do this. Malone & Co have experts that can advise businesses small and large on loan applications – contact us today to find out more.

Loan options

Traditionally, banks have been the first port of call for entrepreneurs and businesses that want a loan to grow their business.

For many, banks still are one of the top options, and there are a range of banking groups across Ireland that provide loans for businesses from seed funding to significant investment, depending on the business’ requirements.

But banks are not the only options for businesses today. There are various other types of finance providers in Ireland that will provide traditional loans to small and growing businesses, as well as other types of financial products.

However, whoever the finance provider is, they will still require certain information and documents from you during the loan application process, and there are strategies you can employ to give your business the best chance of securing the finance you want to help to grow your business and achieve your ambitions for it.

Make sure the business is ready

Before making an application for a loan, you should ensure that your business is ready for the financial injection and that you have clear plans in place for how it will be used.

Your chances of having your application approved will improve if you can demonstrate how you have taken steps to ensure your business is keeping its costs under control. For instance, showing that you have taken advantage of any government grants that are available – there are many government schemes available to businesses of varying sizes and in a multitude of sector – and that costs such as rent are comparable for the area you are based in.

Having several revenue streams will also help an application. The more revenue streams you have – even if it is just a range of regular customers – shows that the business will be resilient if a major customer or revenue stream was to end suddenly.

It can also help to outline what the loan money will be used for by the business. Banks and finance providers will have specialists who can advise on your plans and how the money can be used to the best effect for the business.

It is also advisable to have a detailed financial plan in place to show how you intend to grow the business. If your business is a start-up, then a detailed business plan will be required.

Ensure the business can make the repayments

This might sound obvious, but banks and finance providers will want to see evidence that you will be able to make the monthly loan repayments without putting the business under stress.

There are a variety of things that will be considered when you make an application, including:

• The business is receiving regular payments into its account from customers • The turnover of the business is growing, or at least stable over recent months • That if you have a business overdraft it is not used consistently – it should be in credit for at least 30 days per calendar year • That the business makes its tax payments to the Revenue on time, as well as paying suppliers and repaying any existing credit cards or borrowing promptly • That there is enough money in the business account to ensure that any cheques and direct debits are paid and don’t bounce • In the case of applying to a bank, those sole traders that have a personal account with that bank will have their personal account reviewed too. In limited companies, accounts of the owners and/or directors may also be reviewed.

Finally, it should go without saying that all figures submitted in the application are accurate – such as the turnover of the business – the bank or loan provider will check things like this before approving or rejecting a loan application. Likewise, be transparent about any other loans you may have.

Documents required

While individual banks and funding providers may have varying requirements for what will need to be provided along with an application, in general this is what they will require:

If you are applying for a business loan from a bank that you are already a business customer of, then it may be that you just need to complete an application form, although some additional documents may be asked for.

But if you are making an application to a bank or finance provider that you are not already a customer of, then more documents will be required. For established businesses this usually includes certified accounts for the business for the past three years, six months’ worth of business bank statements and of personal bank statements.

In the case of start-ups, the requirements are somewhat different. As well as the completed application form and bank statements – if the business has any yet – the bank will want to see a detailed business plan, and a Statement of Affairs for the business owner – or for each person that owns the business if there is more than one person involved. Templates for Statement of Affairs can be found online.

Gathering the documents together for the loan, such as bank statements, accounts, tax records etc, can take time, so it is advisable to meet regularly with your accountant, so that these can be collated quickly.

Get advice

As this article shows getting a bank loan can be a complicated process, so it is always advisable to seek expert advice from a financial adviser such as Malone & Co. At Malone & Co. Our financial experts have in-depth knowledge of how to apply for business loans, and what is right for your circumstances.

Malone & Co Accountants can assist on all the relevant aspects of raising funding, including the risks involved, as well as anything from setting up a company and ensuring it is as tax efficient as possible to providing diligence services as part of an M&A deal or funding round in the sector. We can also provide in-depth information to ensure any deal achieves the value hoped for at the outset.
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