Applying for funding
You need to be well prepared and professional when applying for a bank loan or approaching potential investors. Providing the following information will help give potential lenders or investors the confidence to back your business idea.
Make sure you have a credible business plan containing well-researched evidence that a market exists for your product or service. You must document:
- the history of the business
- your previous business experience (if you are starting up)
- how the business's goals can be achieved
- market research and contingency plans to compensate for market changes
- other external factors that could affect the business.
Include these details for lenders/investors:
- the amount of funds required
- the purpose for the funding
- preferred repayment terms
- security offered for the loan
- the basis for your estimated sales
- evidence to confirm your major expense items.
Provide detailed financial data in your plan, including:
- balance sheets
- profit and loss statements
- cash flow statements
- statement of retained earnings
- tax returns
- any other relevant information.
If you are a new business, make sure you draft detailed financial projections. A statement of personal assets and liabilities should identify which of these are in your name exclusively and which are in joint names.
Banks are conservative and more risk-averse than investors, so you need to make them feel as safe as possible. Include details of security available to back the loan up if necessary, and details of any debt secured by way of mortgage, bill of sale or other means. Lenders are reluctant to take third party security from family members, especially if those family members are at an age where there would be difficulty replacing the asset during their working life.
Formulate a clearly defined repayment plan that allows for interest rate rises during the period of the loan. Investors will have very detailed ideas about when they expect to see a return on their investment.
More funding options
Your business may be eligible for financial assistance from the Australian, Queensland or local government. There is a wide range of funding programs to help new and established businesses grow and succeed. Visit the Australian Business Licence and Information Service (ABLIS) for a quick and easy search of available grants.
- Learn more about grants and business support.
- Use our market research kit to find key market and industry information, which you can use to develop or enhance your business plan.
- Learn about how to draw up financial statements and forecasts.
- Read about how to make your business more profitable.
- Find out about becoming an innovative business.
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