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Business Loans
Term loans, working capital limits and unsecured lending — what each is for, and what the file needs to contain.
Match the product to the need
A term loan funds an asset and is repaid over its life. A cash credit or overdraft limit funds the gap between paying suppliers and being paid, and should revolve rather than sit fully drawn. Funding stock with a five-year term loan, or a machine with an overdraft, is how businesses end up refinancing every year.
What the bank looks at #
Debt service coverage, the trend in turnover and margin across three years, conduct of existing accounts, promoter contribution, and collateral. Cheque returns, frequent limit overruns and GST returns that disagree with the books do more damage than a thin profit.
The file #
Three years of accounts with schedules, twelve months of statements for every account, GST and income tax returns, CMA data for a working capital limit, sanction letters for existing debt, and KYC for the promoters. Assembling it in advance is often the difference between four weeks and four months.
What you will need
- Three years of financial statements with schedules
- Twelve months of bank statements for all accounts
- Income tax and GST returns for three years
- CMA data and projections
- Existing sanction letters and repayment track record
- KYC and property documents for any collateral
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