How do I prepare my business credit application?

Sell yourself, sell your project!

The search for funds is a key moment that a large number of entrepreneurs have to deal with one day, whether to start a project, develop an existing company, finance new investments or boost its cash flow.         

Before applying for financing from a bank or financial institution, good preparation is essential to maximise your chances of a positive response. This preparation includes putting together a complete dossier that allows your interlocutor to fully understand your application and its implementation. Your application must also demonstrate the financial viability of your project.

The three fundamental questions

1. The WHO?
2. The WHAT?
3. The HOW?

Preparing your application by asking yourself the three questions "Who, What, How" will help you think about your project from all angles and give it a positive image. This work will also allow you to feel comfortable when presenting your project to a financier, and to anticipate any questions.

1) The WHO?

In the first part of your fundraising dossier, you will have to introduce yourself as an entrepreneur and your company or project in its entirety.

This is about drawing up a complete profile of your activity through the following areas:

• The history of the company or project
• The company's value proposition, i.e. an explanation of the service or product you offer, highlighting its added value for the end customer
• Your skills as an entrepreneur, as well as other internal skills (associates, colleagues, etc.), the training you have received, the certificates, patents or authorisations you have obtained
• A description of the current team and any shareholders
• A detailed organisation chart, for complex structures
• The economic environment of the company with competitors, customers, suppliers and partners
• The variable and fixed cost structure
• The strengths and areas for improvement within the company
• The opportunities and threats concerning the economic or legislative environment
• The areas for development and the strategic vision
• The communication strategy
• The company's values, vision and mission

2) The WHAT?

You will then describe in detail the project and the financial requirement. Your interlocutor must easily understand what this requirement is (for example, equipment, cash flow and stock renewal) and how it will be used in the context of the company, whether for its launch, its growth, its continuation or the development of a new offer.

It is important to make the link with the first point of "WHO", so that the financier can have a global view of the company and understand how this financial requirement will allow you to achieve your objectives. The following points will be discussed:

• An explanation of your need for financing and why you need it 
• The usefulness of the investment you wish to make, whether it is a tangible asset (machine, building, etc.) or intangible asset (marketing and communication costs, training, etc.)
• The impact of this new investment on the company at all levels
• A purchase order or a complete estimate
• A description of the assets (catalogues, photos, plans, etc.)
• A presentation of the technology
• The economic justification of this investment (gains in production or organisation, etc.) 

 3) The HOW?

Lastly, this last question will allow you to explain how you envisage the financial assistance while taking into account the point of view of the potential financier.

Before submitting your credit application, do not hesitate to contact the bank to explain your needs and to gain an initial idea of the financing possibilities. Depending on your project and the type of credit you are applying for, you may already have valuable information on the conditions applied: type of financing, duration, need for an equity contribution, guarantees required by the bank, etc. This approach will allow you to prepare a dossier that takes into account the needs of your project as well as the banking and financial framework.

When you present the figures from your dossier, it is important to be able to understand them and explain them clearly to your financial interlocutor.

If you are starting a new project, be aware of the different hypotheses in your budget, for example. If your company is already in business, don't forget to review your balance sheets and income statements. And if you are submitting your dossier during the year, it is advisable to present a provisional accounting position and/or an annual projection for your activity.

In this part of the dossier, you will present the possible financial arrangement or arrangements through the following points:

• The possible and proposed guarantees
• The duration of the loan, depending on the type of project and the nature of the investment
• The available equity
• The different items in the funding request
• The type of credit
• The alternative solutions (crowdfunding, business angels,...) if you do not obtain the funding or obtain only a part of it
• Implementation in time and space
• The proposed assurances
• The possible performance guarantee
• Risk management
• New customers
• Your communication and sales strategy

The tools

There are a number of tools that will help you prepare and structure your presentation. The best known are the business plan and the financial plan. The business plan will allow you to answer the questions of WHO and WHAT. As for the financial plan, it will allow you to answer the HOW question.

Many other tools exist for further refining your project (see non-exhaustive list below).

• The business plan is first and foremost a fundamental preparation tool to help you launch your project by covering all the points necessary for its implementation.  It will then serve as a roadmap that can be updated to help you grow, pivot, react to the market, and make decisions as your business evolves.
• The financial plan and the cash flow plan are tools for daily use which allow you to check and monitor the company's financial situation so you can react at the right moment with cash receipts, disbursements and the end-of-month balance.
• The Business Model Canvas is a tool used to transcribe the economic model of a company in a simple way. It is perfectly suited to the creation phase, and can also be used to launch a new product or service.
• The SWOT analysis is an analysis method that allows you to work on the internal and external vision through opportunities, threats, strengths and weaknesses.
• The company dashboard is a simplified tool that contains the company's key indicators.
• The monitoring tables allow you to track the sales, the objectives and the progress of the projects on a daily basis.
• The SMART method is a valuable aid in the creation of indicators and objectives.
• The balanced SCORECARD is a method, based on a dashboard, for measuring the activities of a company according to four areas: customer, process, learning, finance.
• The SPANCO method is a sales method dedicated to customer acquisition by transforming a prospect into a customer.

Good preparation will allow you to have 50% success on your side during your application.