The biggest issue which results in a frustrating, lengthy and time-consuming loan approval process, is information required by Lenders to process loan requests not being provided upfront by applicants and/or in an incorrect format.
Information Required by Banks - Treat Requests Like a Tennis Match
To facilitate a faster turnaround when the Lender requests information, we tell our clients to “treat it like a tennis match”.
“Hit that ball straight back over the net” – and provide what the Lender needs in a timely manner!
This helps to build enormous trust and creditability with the Lender.
Provide All information Required by Lenders Upfront – Not in Piece Meal
Providing all the information required by Lenders upfront saves multiple handling of your application and contributes to faster turnaround times. The Lenders will not commence work on assessing a loan application until they have all requested information available so that they can make a decision.
Tip – Collate all requested information and send together at the same time. This speeds up the process, avoiding rework and errors.
Ensure all Loans are Included in the Application
It is critical that all loans, credit cards, asset finance leases or other borrowings are detailed upfront in the application request.
Loan requests are not considered favourably by Lenders’ if information is undisclosed, or withheld, even if unintentional.
Current Financial Information
When seeking finance, providing outdated financial information will generally lead to one of the following outcomes:
- The application will be declined
- The application will be deferred until the necessary financial information is available
- The loan application process will be lengthy
As a guide, most Lenders expect Financials and Tax Returns to be completed within 6 months of the financial year end (i.e. FYE 30th June 2021 Financials and Tax Returns would need to be completed and lodged with the ATO by 31 December 2021)
This would also usually need to be supplemented by latest Management Accounts of the business for the current year.
Having access to real time accounting via software programs such as Xero, MYOB and Quicken allows you to respond faster to Lender requests for financial information (i.e. “hitting the ball back over the net”).
Avoid a Quick No! – Explain Anything Adverse
To increase the likelihood of a positive outcome, at the time of submission be proactive and explain anything adverse that is likely to influence the Lenders view of your business / application
- Downturns in Sales, profits, margins etc. Why they occurred and what action has been taken to rectify
- Adverse Credit Reports on the company or individual directors & shareholders
- Loan Arrears, Bank Account Excesses or Dishonors on the company or individual directors & shareholders
- Adverse Google search results on the company, individual directors or shareholders
- ATO Arrears or existence of ATO Payment Arrangements
It is far better to be up-front rather than for the Lender to uncover such events as part of their (very thorough) due diligence process.
PDF Format with a Description
Banks receive thousands of documents every day.
Providing the information they require in PDF format, with a title that is clearly identifiable, can save a considerable amount of time and lead to faster turnaround times.
It also assists storing this documentation correctly on your file for future use.
Remove TFN’s
For Privacy purposes all TFN’s should be removed/redacted.
Accountants and Professional Advisors
For start up businesses, or where there is heavy reliance upon future projections for debt servicing, it is best to engage the services of external accountants or professional advisors. They help assist in the preparation of Business Plans, latest Management Accounts, and Cash Flow Projections, which build trusts and creditability of the numbers with the Lenders.
Save Time & Money – Collating Bank Statements
Lenders’ will require copies of all your business, company and personal bank statements for all loans, credit cards and savings and transaction accounts.
The easiest way to provide this information is via Illion Bank Statements or Cash Deck who allow you to send your statements from your bank with ease.
This way you save time downloading the statements from internet banking, or getting them from a branch, then emailing as Illion Bank Statements or Cash Deck does it all for you.
Summary
When you submit a loan application to a Lender it is generally approved by someone who has never met you or seen your business.
This is why taking the time to collate all the needed information and providing it up-front is so important.
First impressions count!
Whilst it may take a bit of time at the front-end, it will save you a lot of time and frustration. A further benefit is that this information will be held on your file for future use by the Lender.
If you are thinking about finance, or would like to learn more the information required by Lenders to process loan requests, don’t hesitate to get in touch.
