Information needed for a business loan applicationAug 18, 2017 Blog Loan application info
Lenders on our marketplace are mostly individuals like you and me. It is important to be cognisant of this fact when applying for a loan on the marketplace. The lenders need as much information as possible about you and your business to enable them to make informed decisions. They are motivated by tangible economic returns and need to see the potential in your business’ performance to deliver returns. As such, it is very important for you to communicate information, via our marketplace, to lenders which helps them understand your business’ potential to deliver economic returns. Our data shows a strong correlation between funded loans and effective communication of a business’ performance potential.
When applying for a loan, you will get to a section with the title ‘Build your cover letter for the marketplace’. The information you capture here will be populated on a loan card which looks like the image below once clicked upon:
All the information above is compulsory to complete. We specifically want to point out the importance of the ‘About the Business section’, which relates to your business’ performance potential, and recommend that you use the following guideline to draft your responses
IN THE ABOUT US SECTION (To be captured in the ‘Tell the Lender about your Business’ block)
The business value proposition
Your value proposition is an easy-to-understand reason why a customer should purchase your product or service. It should be a clear statement that explains how your product will solve a specific problem and what the benefits of the product/service are to the customer. It should convince a potential customer that your product/service will add more or better value to solve a problem than other similar offerings.
To make this easier, you can answer the following questions: Who is your target market? What are they looking for? Why should a consumer purchase your business’ products/services? (What problem are you solving)? What are the products/services on offer?
The business’ financial performance
Lenders need to have trust in your business’ ability to generate revenue. You are therefore expected to give a short overview of the financial performance over the last 2 (preferably 5) years, including a reason for the growth/decline in revenue over the period.
The business’ growth plan/strategy
You need to convince lenders that you can maintain the performance your business has had and that future growth is planned, and led by informed decisions – remember their motivation is mostly economic returns. You can achieve this by explaining, in short, your plans to achieve business growth.
IN THE DIRECTORS/TEAM SECTION (To be captured in the ‘Tell the Lender more about the director’ block)
It is important for lenders to have confidence that the management team responsble for taking strategic and operational decisions, have the proven skills to utilise the capital for the purpose as specified in the loan application. The names of the directors will automatically be populated from the credit report. In addition, please include for every one, their URL to LinkedIn profile, a short description of their relevant experience in this type of business (if not available on LinkedIn) and a short explanation of the team member’s role in the company – specifically related to the loan purpose.
IN THE SOCIAL PROFILE SECTION (To be captured in the ‘Provide Social Media details of the business’ block)
Social media for business is becoming more and more important for brand awareness, for business growth and for engaging with customers. Our lenders want to look at your social profiles to learn more about your business. You therefore need to provide your business’ website address and at least 2 social media profile addresses.
Finally, you also have the option to upload any document which you think might add value and make your loan more attractive for lenders – these can include brochures, company profiles, etc.
By completing all the above mentioned information, you are increasing the probability of your loan being funded.