Whether you're a corporate, small business or a simple mom and pop shop, COVID-19 is almost certainly affecting your business in one way or another. A recent article by the BBC estimates that between 800,000 and 1,000,000 business will run out of cash this year (around 20% of total small businesses in the UK) - a scary figure. There is very little that businesses can do except wait while lockdowns and curfews are in force. Little revenue contrasted with fixed expenses means that losses will mount. Thankfully, many governments around the world have stepped in with funding, loan and grant schemes to support small businesses during this unfortunate time.
The requirements and benefits vary for each loan or grant schemes. For example, the Paycheck Protection Program (PPP) in the US provides funds that can be used for payroll costs, interest on mortgages, rent, and utilities and will be fully forgiven by the government. PPP is a 2 year loan at an interest rate of 1%. While PPP funds are forgiven if utilized according to guidelines, other loans schemes do require repayment and even request personal surety. Regardless of the funding programme, business loan scheme or grant you're applying for, there are certain financial requirements that are typically required for your application. Below is a list of the most common requirements for applying for your business loan - it's useful to have these available before you begin your application.
What do I need when applying for a small business loan or grant?
The standard requirements are typically as follows:
Financial statements: Between 1 to 3 years of annual financial statements or annual management accounts, the most recent month's management accounts, list of debtor's and creditor's as well as the outstanding balances, balance sheet illustrating an overview of total assets and liabilities. This information demonstrates you run a legitimate business and would be able to service a loan under normal market conditions.
Forecast: 6 month to 1 year cash-flow forecast that outlines what the funds will be used for (e.g.: payroll, rent). You should not use any loan or grant funding for dividends or to repay other loans - this is typically an exclusion on all coronavirus business relief schemes. The forecast is required to demonstrate that you will be able to repay a loan when conditions return to normal.
Payroll: Payroll information including employee details, gross income and net income. Your employees' livelihoods are ultimately what any business relief scheme is trying to protect so this information is used to validate the salaries and wages account that you show in your management accounts.
Tax: Your corporate tax, sales tax, employee tax and any other applicable taxes must be up-to-date. You won't be eligible for funding if you haven't paid your taxes.
Bank statements: Applications typically require 3 to 6 months of your bank statements. This is used to validate the income and expenses on your management accounts.
Statutory documents: Information about owners, company incorporation documents, industry certifications (where applicable). This information serves as the basic details required for your application and should always be readily available.
If you need any assistance or have any suggestions for additional documents required for small business loans and grants, don't hesitate to reach out to our expert team at info@syftanalytics.com.