How to increase your chances of funding as an SME

Correspondent | Tuesday February 7, 2023 16:49

One key adjustment they can start to make is to set themselves up to be more credit worthy and increase their chances of getting funding.

Credit worthiness is a financial term that a financial institute such as FNBB uses to determine whether the company requesting a loan complies with all requirements and also able to affords to repay the loan or the credit facility.

In the case of a business, a bank will evaluate a number of things related to the business but what is key is for the SME to ensure their compliance are in order to make themselves more appealing to the bank.

FNBB lending solutions

As an integrated financial services provider, FNBB has lending solutions that speaks to the characteristics and needs of SMEs. We all understand and acknowledge the limitations of SMEs in terms of preparing financial statements which come at a cost. FNBB offers Working Capital and Term loans to SME based on their account behavior .

We have a tool that assesses the behavior in Business accounts with emphasis on Deposits and Customer behavior (no bounced cheques, debit orders or stop orders). The tool evaluates and indicate how much the client qualifies for in terms of lending. This amount can be then accessed by client in the form of overdraft or term loan.

This type of facility or loan does not require financials which can be a challenge for many SMMEs.

Through the FNBB Online Banking platform, businesses are also able to track their transactions and view their statements to have a real time snapshot of how their business is performing. By using these available channels, business owners can feel more comfortable about their business’ financial status and make informed decisions.

Payment history and future cashflows Payment history plays a key role in determining your credit worthiness. It is also critical for clients to bank all their proceeds to improve their credit score. A lender is more likely to extend credit to you if you don’t have a history of late payments. If you have an existing loan or credit facility such as an overdraft or a business credit card, ensure that you have been making the payments as per the agreed terms and conditions.

In addition to the history, the Bank wants to see your future, specifically in the form of your cashflow forecast. This is your estimate of how cash will flow in and out of your business over a specific period (often a year). Within your cashflow forecast, you will show the bank how you plan to make room in your future budget to repay the funding. A strong and realistic cashflow forecast will also help you in your process to get funding.

Compelling business plan Part of our role as a bank in funding SMEs is to help boost their growth potential. As a Bank, we understand the value of developing SMEs and helping facilitate their growth, so we are drawn to compelling business plans. As a financial partner FNBB needs to know how the business carries out its operations, in order for it to track and monitor progress at all times. A compelling business plan can include but is not limited to providing a product or service that has the potential for high demand, establishing improved operational efficiencies, employing an aggressive sale, and marketing approach. When presenting your business plan, ensure you are clear and well researched and versed in the product or service you are providing. This will give the bank a better understanding of the business and industry you operate in.

To learn more about how you can increase your chances of receiving funding, contact your business banker and they can advise the funding source to help your business.