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Need Finance to Grow Your Business? 3 Tips from our Experts

Applying for finance to grow your business, particularly through a traditional financial institution, can often feel like you are jumping through hoops. Not too long ago, a bank manager would listen to your ideas and approve or deny your business finance request based on the merit of your plans. Today, loan approvals have less to do with human relationships and more to do with algorithms.

Because banks use public money to fund loans, they are beholden to highly-regulated laws, which is why they are unable to be flexible in their funding decisions. Fortunately, you have other alternatives. “Independent financing companies are more amenable to hearing you out and finding a funding solution that fits your business needs,” says Michael Barr, Chairman of Cullinan Financial Services (CFS), a boutique financial lending firm.

While independent financial institutions can be more agile in their funding decisions, it is important to choose a firm with a robust position and significant financial resources. “CFS is a subsidiary of Cullinan Holdings, a JSE-listed company, which gives you the best of both worlds,” says Barr. “We use internal resources, but still adhere to Corporate Governance best practices, which gives you the security of a well-capitalised firm without the red tape of a traditional bank.”

However, before you apply for a business loan – whether through a traditional financial institution or an independent firm – you need to dot the i’s and cross the t’s. Here’s your checklist:

1) Have a plan

Your first step towards successfully receiving business finance is to evaluate why you are looking for funding in the first place. With South Africa’s economy expected to continue underperforming, despite recent reports of improved GDP growth, now is the time to plan ahead for your finance requirements. Unplanned debt or ‘life-raft’ funding can be costly in the long run, whereas strategic funding, by its very nature, is structured to suit your business’s real needs.

“If you have a calculated reason for the injection of funds then it makes sense to look for finance,” says Barr. “You must also be sure that the finance you receive will help you achieve your milestones more efficiently and effectively than without it. Additionally, it’s important that you partner with someone who can negotiate the best deals and terms and give you options to include a mix of short-term, long-term and structured debt in your finance solution.”

2) Match your funding to your growth

As your business evolves, the need for flexible finance becomes crucial, especially to fund growth or remain agile in a constrained economy. Companies caught between a rock and a hard place, however, will too often accept the first offer they receive, regardless of whether it is the best source of funding for their business and stage of growth.

In today’s challenging business climate, shrewd lenders will jump at the opportunity to cash in on uncertainty, but Barr warns companies against making uncalculated loan decisions. “The skill lies in growing your business with limited exposure to risk,” he says.

“Let’s say your business has the potential for growth and you have recognised the opportunities, but your cash flow is limiting you from reaching your potential. This is where CFS would help you to take advantage of those opportunities with purchase order funding; cash upfront to secure the requirements you need to turn opportunity into business growth.”

3) Get your house in order

Before applying for finance you need to get your paperwork in order, and this includes knowing your numbers. “Financiers understand figures and will challenge you on them to quickly see how familiar you are with the inner workings of your company,” says Barr. “Be conservative when you present your financial projections and support your figures with evidence,” he advises.

Additionally, it’s important to do the legwork on the firm you’re approaching for finance. “Knowing more about the lender you’re pitching – what they offer and their minimum requirements – will save you time and prevent wasted effort,” says Barr. “For example, Cullinan Financial Services offers import finance, trade finance – including purchase order funding – as well as bridging loans and property finance with a minimum loan spend of R1 million.”

“It’s also key to find a firm that will be a ‘good fit’ for both you and the lender,” he adds. “The best way to achieve this is to choose a firm whose values are aligned to your business. At CFS, we value relationships built on partnership, integrity and transparency.”

Cullinan Financial Services offers tailor-made financial solutions for a variety of marketplaces at highly competitive rates. Apply now.