Why do lenders ask for so much information?

Bank statements please, Balance Sheet please, weekly shopping list please.

Does this ring a bell for you? You may think that the amount of information you are asked to provide about your business is one step short of a life novel, main character – you. However, there are good reasons that lenders ask these questions and I am going to go through some of the headlines, with input from our Credit Team to help you understand the background.

First of all, why?

It’s important for lenders to build a good picture of the direction of your business, and the steps you have taken to get to where you are now. This allows them to understand why you need a Finance Facility, and to ensure that the facility will help you in the long term towards your business goals. Driving their understanding in this way allows them to make quick decisions – ultimately meaning that you are able to plan with speed.

Who does it benefit?

Whilst it may be inconvenient for you to have to gather all of this information, the people that are providing the capital need to, in the first instance, get some assurance that you are in a position to pay it back. However, the main benefits are for you, as a client. If a lender knows everything about your business from the outset, it removes assumptions and means that the facility you end up with will be reliable and provide the best-fit for you. It’s important for your chosen lender to understand your business deeply and as it grows, so that your finance facility can be structured correctly, and changed if your business changes.

What will you be asked for?

Here is an itemised list of the documents you will be asked for when applying for a Working Capital Facility:

  • Bank Statements (3 months)
  • Balance Sheet
  • Management Accounts
  • Cash Projection
  • Cash Flow Statement

It’s important to supply this information as quickly as possible, as Neil Harrington, Senior Credit Manager at Sancus, explains; “We like to obtain a sufficient level of information at the outset to understand the history, dynamics, trading performance and future prospects of a potential client. Whilst we undertake a level of due diligence at desk top level, the provision of good quality management information enables us to get under the skin of the business and understand its working capital requirements. We encourage our credit underwriters to liaise directly with the business to fast track this process where appropriate. This enables us to arrive at an informed decision as swiftly as possible and try to tailor a solution to meet the client’s needs.”

Andrew Oppe, Regional Director

For more information on Working Capital Finance Facilities and the credit requirements involved contact me today on 07432 076091 or at Andrew.oppe@sancus.com