In an ideal world the bank would just handover cash with no questions asked. Wouldn’t that be great? Unfortunately life isn’t like that and when you need money to start or grow a business, you can expect to be grilled on a level unseen since the Spanish Inquisition.

Most banks are extremely reluctant to hand over money without a good reason. They were badly burned during the global economic recession and it is no longer easy to secure business finance – or indeed any kind of finance. Things are slowly improving, but you will need to be well prepared before you visit your bank manager, cap in hand, to beg for extra cash. So, if you’re dead set on borrowing from a bank rather than a lending company like UK Home and Personal Loans, what questions can you expect to be asked when applying for a business loan?

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1. Do You Have a Business Plan?

The first thing most asset based lenders will ask is whether you have a business plan. This document doesn’t have to be twenty pages long, but it does need to contain key information such as a short summary of what the company does, what your products are, and who your target market is. It should also include financial information. And if you aren’t sure how to create a business plan, look online for a basic template to get you started.

2. Do You Have Cash Flow Forecast?

It is good business to produce cash flow projections on a regular basis and banks will expect to see a detailed cash flow forecast before they contemplate handing over money. After all, if you have no idea whether there is enough money in the bank to pay creditors, it won’t be long before you are calling in the receivers.

3. Do You Have Collateral?

Most banks will only lend money if you have assets to back up the loan. That way they are protected in the event you can’t meet the repayments. In the case of a small business owner, the assets are usually personal, so don’t be surprised if you are asked to sign a lien on your family home in order to get the cash.

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4. Do You Have a Copy of the Business’s Accounts?

Your bank manager will ask to see a copy of your latest business accounts. This will include the balance sheet with details of assets, liabilities and capital, and your profit and loss statement. You may need to supply accounts going back several years, so be prepared for this. You may also need to supply a set of audited accounts.

5. Do You Have Details of Your Personal Financial Details?

Expect to be asked for information about your personal spending habits, including details of all UK personal loans, credit cards, investment and savings accounts, etc., in your name. The bank will also want to see the same information from the other owners or partners in the business.

Securing business finance is not easy, but if you have all of your ducks in place before you meet with the bank, you will look more professional and the process will be a lot less stressful.