How do you know that the company afford to obtain more credit facility?

Taking on a debt if you have a reasonable need, a sound financial track record, a firm financial history, and stable business, most banks, finance institutions, investors, etc will be willing to lend you the money.

Funds are required for different reasons. It could be the need of cash itself, or the need for the financing to purchase machinery or more equipments, even better acquiring big assets such as a property.

It is always better for the lender to make their own analysis so they can be able to calculate the risk of borrowing out their funds. Lenders may finds it encouraging to lend money to businesses that have activities. When people see activity, it generates excitement and excitement generates greater giving and participation in your request.

Briefly, what we are encouraging is that at least create an active profile that will best motivate your potential funder to assist with the funds.

One more important factor that is always overlooked is the proper structuring of the finances. As a director of the company, though you have a direct access to the business funds that does not mean you can spend as and when you wish. More so for your personal use. You ought to earn a salary from the business, which will qualify you to cater your personal needs.

Investors take seriously your relationship with the business funds. They are more likely to scrutinize the cash flow statement more than any other part of your financial report.

Some funding requests or credit applications are declined not because they think the business is not profitable but because of the lack of financial discipline.
Learn to implement order in your business. Keep a budget and stick to it. Set a sales target and fight to achieve it. A growing business is encouraging and a motivation.

Trade with direction. Happy trading!

Compiled by Dikeledi Seoloane on behalf of Matsobanemetja Business Consulting (Pty) Ltd
A registered Accountant and Tax Practitioner.

http://www.matsobanemetja.co.za

Published by Matsobanemetja Business Consulting

Business to business service company that provides exceptional quality to its clients and maintains accurate & professional Bookkeeping, Accounting, Taxes, Consulting Services, Business Coaching & many more.

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