Financial Guide for SMEs - SME Corporation Malaysia

Financial Guide for SMEsTo gain an understanding of your personal position, the lender will usuallyrequire the key fi nancial information for the past three years. This is to ensureany unusual circumstances are ”averaged” over the period.Historical Business InformationFor existing businesses, the lender wouldwant to review historical financial information.Typically, they would want at least three years’business records to give an indication of thebusiness operations. The financial informationthey require will be the statements outlined inChapter 1- balance sheet, income statement andcash flow statements. Ideally, this informationHINTMake sure you understandall the fi nancial informationthat has been preparedand is being presentedshould be either prepared and or reviewed by an accountant. This willgive comfort to the lender that all the information contained in the statements isaccurate, complete and correct. In addition to the financial statements, the lenderwould also most likely want to check the historical operating data of the business.This will provide an overview of the way the business is managed and some insightinto the character of the owner. Such information may include annual tax returns,current accounts receivable and payable schedules (debtors and creditors lists),bank statements for all bank accounts and loans for the past three years or detailsof any other type of financing such as leasing or hire purchase.Presentation of the Loan ApplicationThe most important asset of a business are the experience of the owners, thepotential value of prospective customers and other non-fi nancial items. It is forthis reason that some banks may require that you make a presentation to theloan approval committee. The committee will be looking at your confi dence,management style and capacity to understand fi nancial and other risksassociated with your business. In doing so, you will be able to present yourself,your business and your fi nancial needs in a manner that will convey a messageof confi dence and capability to the lender. This may well be the fi rst step indeveloping an ongoing relationship that will foster the growth of your businessin the future.To ensure that your presentation is successful, establish the expectations ofthe lender before you meet with him or her. This can be done by looking at thewebsite of the fi nancial institution or by contacting the institution and askingfor a checklist of the information that will be required. In addition to the loanapplication package, be prepared to discuss certain aspects of your business,competitors and industry. Be prepared for the lender to look at relevant financial139chapter 7-13 p79-181 Eng.indd 1398/15/11 5:03:05 PM