Many businesspersons have always asked the question of when is the right time to take the risk of acquiring a business loan. It has always been a question that is frequently asked and propelled throughout the different segments, industries, and nature of businesses. As such, as a business owner, it is important for you to be knowledgeable and understand these aspects and measures that can assist you in understanding the requirements that must be fulfilled before thinking to take your first business loan. 

Requirement #1

‘Your Business or Company must be running for a minimum of 2-3 years

Many business owners find this aspect hard to accept, as they always look at the factor of the ‘need for capital’ and longevity. This simply means that during the earliest days of business, this is where most businesses find it extremely difficult to acquire funding and working capital to make their business fully functional and thus profitable, which is within its entirety an accurate statement. However, what we must accept as business owners are that it is throughout these times that we are tested with all the realities and burdens of running a business successfully. As such, if we should look at this aspect from a monetary or financial view, we will then understand that it would be a gradual risk to lend money to a new business or company that has not even pushed through its survival period. Hence why many businesses and companies have found it difficult to sustain their operations throughout this time and then ultimately close. Thus, positioning your business throughout this period and learning all the right things are key components within these times and will ultimately be one of the most important factors that will deem your business qualified for a loan. 

Requirement #2

‘Opening or having a Business Account

Whilst some may argue that their track record or credentials of earning revenue can be established by a full assessment of their personal account, the fact or aspect of it being ‘personal and not business’ will always come into play. A personal savings account is one that sustains personal and non-related business activities that may include your accepting or transmitting salaries, utility payments, shopping, etc. Whilst a business account ultimately monitors and accepts all business-related transactions that may include accepting customer payments, huge money lodgements, making salary payments, etc. As such, opening and monitoring this account will ultimately show and prove accountability and credibility that your business is completely legitimate. 

Requirement #3

‘Passing monies through a Business Account’

Another requirement is that many business owners are still falling short as they most times turn to the fact that the cash is used at the business as petty cash or to pay for goods before it actually reaches the business account. However, this will or may not help in no way shape or form. To diminish this notion, it is highly recommended that some form of subsequent petty cash system is implemented daily with the practicality and understanding that whatever is earned throughout the day will then be lodged straight to your business account. And yes, this may mean that you’ll need to visit the bank more than once daily to ensure that this is being done. As stated in requirement number two above, your track record within your first couple of years is extremely important. Thus, every effort must be made for you to have this revenue lodged as this will be your proof of whatever revenue that your accountant stated was earned throughout the financial year when trying to access a loan. 

Requirement #4

‘Being Tax Compliant’

And yes, this simply means that all your taxes which may include your ITO2, ITO3, ITO7, SO4, SO4A, SO1, or FORM 4A (GCT) are filed, paid, and up to date. As you know, not doing this will only make matters worse when the bank needs that Tax Compliance Certificate (TCC) to fully process your loan. What many businesses do is to put these aspects or filings off until the outstanding amounts are huge and thus will ultimately prove too much of a burden to fulfill. As such, we always encourage persons to ensure that proper measures or systems are being implemented to ensure that all these tax filing implications are being done timely. 

Requirement #5

‘Being Compliant with the COJ’

This is another that businesses fall short of. And it is usually right before the loan is being processed that they usually become aware. All businesses whether Sole traders, Partnerships, or Company Limited must have a valid business certificate before any loan of the sort can be processed. Especially within the aspects of operating a Company Limited where the bank will most times ask for a ‘status report’ in the form of a ‘____’ that ultimately proves that all filing is being done and updated at the Companies Office of Jamaica. Thus again, we can ultimately see why this is important in attaining a loan.

Requirement #6

‘Attaining Assets’

Whether it’s trying to purchase a motor vehicle to carry goods or buying tables, chairs, and shelves for your business, all these things will ultimately aid in ensuring that your Assets are of greater value than your Liabilities. This is shown and proven on your balance sheet when your accountant compiles your Financial Statements. After this has been complied with, most banks will then ask for the submission of a Cash Flow Projection which will clarify and show how your business operations will be affected by whatever was done with the loan. Which may include buying additional stocks or purchasing another vehicle to transport goods. However, it must be known that all of these aspects will ultimately have some form of effect on your business and thus will aid in showing how your debt servicing will be done over the course or time of the loan. 

Requirement #7 

‘Having a GOOD Credit Score’

Having a bad credit score simply means that you may have unsettled loans or credit cards in the past. Thus, the credit bureau is now fully in effect with the implementation of a ‘credit score’ system that captures all credit that was opened by you or your business over a seven-year period. This ultimately means that all these factors will come into effect with scoring or proving your credibility. As such, if you fall within this notion of ‘having bad credit’, do ensure that you contact your facilitator in providing whatever loan or credit that was given and try to come to some form of agreement with settling these issues. Trust me, you’ll thank yourself in the long run since not only does this affects you but also becomes tied to your business. Failure to do so will even leave you with the possibility of not being pre-approved for a business loan of which many business operators are being blessed with the opportunity to have easier access to funding. 

Requirement #8

‘Having Proper Business Records’

Again and again, this notion is pushed and preached amongst most business owners. However, most times they still come up with all these excuses of why this can’t or is not properly done. As such, accountants have over the years found it extremely difficult to acquire and attain this information. Thus, we again encourage business operators to not wait until they are called by the Tax Office for an audit or when they are in desperate situations where a loan is needed, and you then scamper all over the place to scrap information to give your accountant to compile your financial statement. But please do so on a continuous basis by implementing a proper recording system. 

With all this important and valuable information now being placed at your fingertips or should I say in front of your phone screen for you to read. Let’s hope that you will now ultimately place those improper business practices aside and use these shown above to increase your chance and credibility to have access to business loans or funds. As we all know that in the long run, your business growth will ultimately depend on this.

If you need help or further information, please feel free to contact us at 1 (876) 902-7259 | 545-6928 or email us at BIZcareConsultationAcct@Gmail.com to arrange your consultation session. Do remember at BIZcare “Your Business is our Priority”. We offer the services of:

  1. Business Registration
  2. Tax Filing
  3. GCT Filing
  4. Payroll Services
  5. Consultation Services
  6. TCC Services

And Others.

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Written by: Kmar Henry [ CEO |BIZcare Consultation & Accounting Firm Limited ]

Edited by: Sheryl Bailey [ Director | BIZcare Consultation & Accounting Firm Limited ]

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