Bizstartup.ie - Biz Centre

Because bank finance is an investment in the future, you will also need to show that your business can survive the medium to long term. And of course, your bank needs to know that the business owners and managers have the skills and commitment to deliver the projected business results. These key points will be well covered in your application when you include the information outlined below.

1. Background

Give background details on your business, including business activity, ownership, management team, history and location. You should also include information on the key stakeholders – customers, suppliers, competitors, etc.

2. Purpose & Vision

Explain how credit finance will help yourbusiness. Outline past achievements and provide clear future objectives for your business, both short term and long term.

3. Risks

Show how you understand the risks that affect your business, and outline the stepsyour business takes to reduce/mitigate these risks. It’s important to address both internal risks (relating to your product, service and business operations)and external risks (competition, market changes, etc).

4. Financial Information

Provide historical financial informationin the form of audited accounts and, where appropriate, the following types of Information:

• Management accounts for the current year.
• Cash flow forecast for the next three years, and details of the supporting assumptions
• Breakeven analysis
• Aged list of debtors/creditors
• Confirmation from the Revenue Commissioners that all your personal and business tax affairs are in order
• Total assets/liabilities (personal and business)
• Other information relevant to your particular industry/business.
• Business Plan document: your Business Plan is how you will present your business to various important stakeholders, as well as to AIB, when you seek bank finance. It should include relevant information outlined above, laid out clearly and concisely. We do recommend that you seek professional advice from your accountant and/or solicitor when writing your Business Plan. You can also seek the support of various business organisations and state agencies – Chamber of Commerce, ISME, SFA, Enterprise Ireland and your local Enterprise Board – that can offer useful advice and information
• Financial Requirements: Set out exactly what you need from AIB, including the amount and purpose of the borrowing. If you’re looking to borrow part of the cost of a project, do include the total cost and details on how you will fund the balance. It is important to outline the steps you took to determine the right level of borrowing, which should allow for unexpected expenses and be supported by a budget in line with your Business Plan
• Repayment: It is critical to demonstrate how your business will repay the finance facility. Be clear about the source of repayment and include potential alternatives in the event of the expected source failing. Your budget and cash flow forecasts should reflect realistic business expectations for the period of the facility
• Security: Provide details of any security you are offering to support your application – for example assets, a personal guarantee, Letter of Pledge or Letter of Lien. Irrespective of any security you may provide though, the lending decision will be based on the capacity of the business to repay the finance.

If yours is a new business, you will also need to provide:

• Forecast Trading Profit and Loss Accounts for the next three years
• 12 months of any previous business and/or personal bank statements
• Business Plan (ideally prepared with your accountant).

This article appears courtesy of AIB

This article © copyright Allied Irish Banks, p.l.c. 2010. The information does not constitute tax, legal, investment or any other advice by AIB. No representations or warranties are made as to the reliability, accuracy or completeness of the information.