Need a Loan to Grow your Business?

The Northland economy is clearly growing as evidenced by the struggle to find a car park or queuing in traffic that little bit longer not to mention that there are far fewer retail spaces available to rent. 

For many businesses, this is an opportunity to grow but growth needs cash. Growth can include better equipment, more staff, moving premises or acquiring your own premises. Cash can come from an injection of the owner’s funds, but more often it’s from applying for a business loan. When you do, it can be very beneficial to work with your accountant so that the process is managed correctly and maximises your chances of successfully securing funding.

Your accountant can ensure you’re applying for the right amount and that you can service the debt. They can prevent you from underestimating what’s needed and having to go back to the lender at a later date to ask for more which doesn’t show good financial management. How much you should be borrowing depends on what you need it for. As a general guide you should consider a balance of 2 to 1 regarding current assets to current liabilities (we can assist you with that). 

Banks will look at how your business is performing, what money comes in when, and where your profit margins are. But they also want to look at your projections and how you will use the borrowed money to make more money in order to pay back the loan, manage a good business and achieve growth.

The information needed for the Bank needs to be clear, accurate and up-to-date. Ideally you should provide an up-to-date set of Financial Accounts and a 3 way forecast so the Bank can see projected profit, cashflow and financial position. 

When you’re applying for a loan, it’s important to be specific about what you require funding for. Your loan structure is also very important… borrowing short to invest long is a recipe for disaster! Understanding the impact means doing the projections.  

If you’re considering borrowing money for expansion come and see one of our Chartered Accountants at PKF Kerikeri for a complimentary review. We’ll discuss your options and plan a strategy for your future.

Click here to enquire about an appointment.