• Financing
    • Sustainable Financing

Tips for Businesses To Secure Commercial Financing

  • Article

Businesses everywhere need to take the necessary steps towards ensuring their future success and sustainability. While these steps vary and are many, one of the most common methods is to secure commercial financing from financial institutions. The funds that a business secures through this means are usually used as building blocks in scaling up, assisting in reaching more success.

In Indonesia alone, loans worth of hundreds of billions of rupiah have been recorded by the Bank of Indonesia as per August 2023, suggesting that commercial financing will only continue to be a trend.

As you look for the best options to assist you in securing loans and taking your business to the next level, get the right understanding on commercial financing and what it entails. Learn some tips to help you through the vetting process of these loans.

Commercial Financing: Definition and Scope

While many financial institutions and banks offer different types of services and products within their commercial financing department, the core of commercial financing itself is funding arrangement for businesses. This arrangement can take on many forms and terms plus conditions, however, banks as the financial institutions who usually give commercial financing would treat it as a debt and require their customers to pay it back with interest. Some banks also offer catered services that are related to these arrangements for their customers.

The scope in which a business might need commercial financing could also vary. While a company could be after securing a large sum of working capital for expenditures, you may need to cover some operational costs during the early years of your business to keep it afloat. Whatever goals that you have set for your business, reach out to your local bank’s commercial financing department to see how they can help you in realizing those goals.

The Requirements: Tips to Help You Succeed

Statistics say that financing and loans for small businesses are not easy to get, with only up to 13.2% of loans being approved. Thus, you would need some tips and pointers to help increase your chances of getting commercially financed.

Prepare Thoroughly

Before moving forward to the application process, take some time to thoroughly prepare yourself. Set the goals for your business and outline them, then analyse these goals to find out how you are going to achieve them and what means you would have to take to reach them.

During the analysis phase, decide which of the lender’s products and services would provide the best answer for your needs. For example, if your goal is to digitalize processes and streamlining them for a more effective and efficient cost management, consider the digital solutions that a lender might assist you with. This can help you simplify your business’ transactions by having everything integrated in an online platform that can be securely accessed at any time.

Be Honest, Yet Tell a Story

When you are done with the preparation stage, it is time to move to the next step: the vetting/interview process. Being honest is always a good thing here, however, do not forget to share everything earnestly in a compelling way.

As Lenders, banks often ask you to talk about your business. Answer their questions confidently and state everything as a matter of fact, yet do it passionately. This is a critical step towards making a good first impression and getting the necessary approval to help your business.

Open an account at the bank of your choice and submit your commercial financing application. Share the story of what made you started your business. What is your mission and what answers are you trying to provide? What makes you stand out from your competitors? As you tell your story, create a concise yet humane one - you will be set apart from other applicants, improving your chances for a successful approval.

Clearly State What You Need

During the interview itself, you have to make sure that you could clearly state what your business needs. Whether it is working capital or help with import/export loans, presenting your case in a clear manner helps lenders to gain more confidence on you.

By stating exactly what you will need help with and how much help that you are seeking for, you are taking control of the application process, showing that you know your business inside out. This helps build good rapport with the lender.

Prepare the Right Documents

Ultimately, how you perform during the screening process is not the only thing to consider. While document requirements are usually not set and shared among lenders, you have to ensure that, at minimum, you can supply the following documents:

  • Business tax returns of a minimum of three years, prepared by an accountant
  • Interim financial statements to help lenders learn and understand your current financial situation
  • A business plan. This is especially paramount when your lender is not familiar to your industry
  • Your business’ legal incorporation documents
  • Personal financial statements. These can act as your personal proof of income documents and, in some commercial financing plans, as a safety net should you fail to repay the lender

Different banks may need you to submit different sets of paperwork, which could be dependent on the types of financing help, such as forfaiting, that you need. Always check with your bank on what documents that they make mandatory.

Getting Started

When you are well-prepared and ready to embark on the journey of trying to secure commercial financing for your business, contact your local bank and inquire how they can assist. Follow their guidelines and requirements carefully to help improve your success rate in getting your commercial financing needs.

Conclusion

Commercial financing, while needed by many businesses to help them grow and thrive, can sometimes be challenging to secure. By understanding what it is and learning some tips that can improve your chance of securing it, you can further grow your business, taking momentum of the growing economy in Indonesia.

Need help?

Get in touch to learn more about our banking solutions