Tips for getting the right funding

We have pulled together some top tips for businesses:

• A funding proposal should be a concise document with a clear summary at the start to enable to lenders to quickly understand the opportunity, how the funds will be used and why it makes sense for them to lend to the business

• In addition to a base or management plan, the proposal should include ‘sensitised scenarios’ showing how the business will perform under pressure, and what this means for the businesses’ ability to service and repay debt. This is particularly relevant now with funders wanting to understand scenarios such as a drop in sales due to a tightening of the “lockdown” or a second spike in COVID cases

• Show clearly what the funding will be used for and, if other funding is coming in alongside the lender (i.e. equity), show a table of sources and uses of funds

• Make sure a funding proposal is realistic. Lenders will immediately be skeptical if they receive funding proposals that are based on unrealistic assumptions and therefore do not make commercial sense

• The proposal needs to be relevant and where appropriate tailored to the funder you are approaching. Many lenders have their own unique requirements that need to be met, so a proposal should set out how the funding ask meets these requirements

• Although many lenders are focused on emergency loan schemes, there are still many alternative funders that businesses can approach. The debt markets are incredibly fragmented, so knowing which lenders are the best to approach is key to maximising your chances of securing funding and crucially saving time

Our article on business loans is here

Check out our finding the right finance article here

We look at identifying the best funding options here

And our article on the State of the funding market here