Economy for SMEs forecast to get even tougher in 2012

As the economy is forecast to get even tougher in 2012, it is especially hard for small and medium enterprises (SME’s). The Chairman of the Corporate Finance Network, an organisation of SME Corporate Finance experts, is Kirsty McGregor, and she has said that there are 4 small steps that you can take that will make a big difference when you are attempting to secure a loan.

The first step to getting the loan that your business needs is to create a proper business plan. This should be easy to read, succinct and perhaps most importantly, credible. It needs to be laid out clearly and any financial assumptions should be backed up with evidence. There is no need to pepper it with jargon, just keep it simple.

The second step to assess who would be the best lender for your requirements, and to be realistic regarding how much they would be likely to finance. One way to do this is to discuss the market with your accountant and you may be able to use their advice as well as their personal contacts to get ahead.

The third step is to set out by explaining how you manage your business, and lay out what measures you have taken to recognise future problems at the earliest possible stage. This includes explanations of how you have created your selling prices such that you are able to turn a profit. If you are accepting a loss-leader, then this will need to be explained.

The fourth and final step is not to give up. Even if your chosen bank does not approve your loan application, then you can appeal your case. Over 1000 appeals have been made since last April, and 1 in 3 is approved. There is always hope that things can change, although this will not be easy.