The higher the stakes, the higher the reward. But, just try explaining that to a bank manager when you’re applying for a business loan.
As the Financial Services Authority (FSA) tightens its grip on responsible lending and banking practices, getting cash from a bank has become more difficult than beating the house in a casino.
The higher the stakes in your business (whether it’s construction finance or any other seldom booming sector), the less likely you are to get even a sniff of interest from lenders. The aforementioned construction sector has it toughest – with projects that could take years to build and, therefore, years to generate a profit, the risk is deemed too high.
It’s led numerous foremen and construction companies down the less-travelled roads of finance as they attempt to pay their employees and meet building deadlines on time.
The world of construction finance has, much like every avenue in the booming world of alternative finance, become a major industry in its own right by providing builders with the cash they need to continue projects.
But, lending companies still need reassurances that you’re not going to spend your latest loan money on a stupidly expensive safety hat or a night on the tiles with your workmates. So, here are a few tips to securing that much needed form of alternative finance.
Make your business plan foolproof
Your business plan is the bedrock of any financial negotiation, providing you with an outline of everything your business could want and, if you’ve laid it out correctly, it’ll make investors sit up and take interest in your enterprise.
What the ideal plan needs is a viable and realistic set of aims, followed by an outline of how those aims can be achieved. It means that those pie in the sky fantasies you’re having for your business will be flung out the window before you even get started.
Perfect your business plan before consulting anyone with a financial query, and you’ll be taken far more seriously.
Know your finances inside-out
Just like your business plan, knowing how to personally balance your books shows an investor that you have the entrepreneurial savvy that goes hand-in-hand with a talent for numbers.
Without knowing the specifics of your cash flow, there’s little chance you can argue for more of the stuff. So, look over your books, or get an accountant to help you, so you can go toe-to-toe with any potential investor’s questions.
Be realistic with your expectations
It’d be lovely if everyone could saunter into a bank, demand a million pounds and have it handed over to them as though they had casually requested a black coffee. Alas, in the real world there’s no way that’s going to happen.
When you’re negotiating for any form of finance, it’s important to consider how much you actually need. A large number of construction finance specialists will actually help the decision be made for you, by recommending an amount you could afford after a visit from a quantity surveyor.