Stick To What You Know
There is a fine line between imparting essential knowledge and being patronising. There is an even finer line between essential knowledge total waffle.
When assessing lending applications the lender will look at the publicly available information such as Companies House, Duedil and NSO. They will also look at information from other sources such as credit reference agencies and financials provided by you. After that they look at the story being told by you.
Your story is the bit that tends to make or break the deal. The key is to stick to what you know.
The Mistakes Borrowers Make
There is a tendency for borrowers to provide too much information in an attempt to convince the lender they are worth lending to. As a result the borrower provides unnecessary detail which is often irrelevant to the application, this creates more reasons for the lender to question the application rather than reasons to approve the deal.
Forget about the information you think the lender wants to know and stick to what you know and what is relevant.
In essence relevant information is the stuff that you know best. Lenders will always ask for financial information and forecasts, what they really want to know surrounds where these numbers came from and despite what you might think this is the bit you know best.
Sticking to what you know means providing the lender with things such as;
- Your target client base, the USP and offering
- Average sale value, client numbers, opening hours etc
- Supplier terms, choice of suppliers etc
- Your terms of business, debtor days being offered
- The KPIs for your business, what you will be measuring and why
Underneath everything else it is these factors that drive the numbers and what the lender wants to know.
Don’t go for waffle and don’t explain everything to the n’th degree, this will only give the lender more reasons to look forensically at your proposal and more reasons to question what doesn’t need questioning. Stick to what you know as it will improve your chances of getting the deal you want.
For more details on underwriting and how things work then please get in touch or add comments to the post and we will get back to you.
By Dave Farmer