Lesson 1, Topic 1
In Progress

4.2. The information and back-up documentation needed to process application for funding is collected and used to complete the application.

ryanrori January 7, 2021

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The Cashbooks that you have all been working on so diligently will now eventually find their real use. Anybody that will consider lending you money will want to know if you are going to act responsibly with his money. If you can prove that you acted responsibly with your own money, even if it was never huge amounts, the chances are very good that you will also act responsibly with somebody else’s money. The time has therefore now come to tidy up your Cash Book and to collect any other evidence that could convince somebody that you are a responsible person when it comes to money.

If you participated in the Landbank Step-up Scheme, evidence of your timely repayment of even small loans can be very good evidence of responsible behaviour. Bank statements of Transmission accounts, savings accounts, timely and regular payment of monthly house rentals, letters of reference by persons who have been financially involved with you and who walked away with smiles on their faces, records of down-payments on furniture or other items bought on credit, can now all count in your favour.

Each financial institution will have their own rules but all will at least adhere to the following principles:

  • You will have to be able to prove your identity beyond any doubt.
  • You will have to provide proof of your place of residence as well as other contact points such as place of work or family in case you leave your indicated address and simply forget to notify your funder.
  • You will have to provide proof of a regular income from a salary or your own business.
  • You will have to prove that you can work carefully with money by showing proof of credit records, cashbook or a clear credit record.
  • All applications for business finance MUST be accompanied by a detailed business plan.
  • All applications must be done in writing and the bank will want documentary evidence. You must therefore be prepared to leave certified copies of financial statements or evidence of good conduct with the bank without being asked for it.
  • NEVER DEMAND, be polite and humble. Listen carefully to the lender’s viewpoints and only disagree if you can really prove and substantiate your point. This is not the forum for a fight. Even if you win the argument, the lender might just decide that he “does not like your face” and the opportunity to obtain funding is gone.

Definition of Return on Capital (ROC): The amount of money stated as a percentage of the total amount of capital invested in a business (investment and collateral) that you intend to make after a predefined time period. It is the investor’s “interest” on his investment.

Return on Investment is a very important figure for investors. This is the magic figure that shows them which investment, ignoring risk for a moment, has the best potential for profit and a higher return than its competitors. If any business, that is a high-risk venture under most circumstances, cannot offer a higher return on investment (interest), than a bank, that is normally the safest place for your money, what will convince any investor to risk his money with you and your business? If you however show that your business can grow it’s market share or have the potential to become a real money spinner, an investor might be convinced that his return on investment will later grow to such a substantial level that the initial underperformance is swallowed up by future anticipated profits.