Most loan applications fail on preparation, not on the strength of the business. Here is what lenders look for, and how to get it in order within a month.
Lenders are not only judging your idea. They are judging whether they can trust your numbers and whether you can repay. A business that presents a clean, complete pack is treated very differently from one that produces documents in pieces.
Week 1: Get your financial records current
- Books written up to the latest month end, with bank accounts reconciled.
- The last two to three years of annual financial statements, ideally signed off by a chartered accountant.
- Current management accounts showing year-to-date performance.
- A schedule of debtors, creditors and existing loans.
Week 2: Get your compliance in order
- Valid ZIMRA tax clearance and up-to-date returns.
- Company registration documents, and shareholder and director details.
- Licences and permits relevant to your industry.
- Evidence that PAYE and other statutory payments are current.
Lenders often decline an otherwise sound application because of a tax compliance gap. It is easier to fix it before you apply.
Week 3: Build the forward-looking numbers
- A 12-month cash flow forecast showing how the loan will be drawn and repaid.
- A short profit forecast with clear assumptions.
- A repayment analysis: can your cash flow cover the instalments with room to spare? Lenders typically want to see a comfortable margin, not just break-even.
Week 4: Package it
- A two-page business summary covering what you do, who your customers are, why you need the funds and how they will be used.
- The loan amount, term and security you can offer.
- A schedule of assets available as collateral, with proof of ownership.
- Customer contracts, purchase orders or quotations that support your projections.
Common reasons applications are declined
- Records that are out of date, or that don’t reconcile.
- Projections with no stated assumptions.
- Loan requests that do not match the business’s ability to repay.
- Undeclared existing debt.
- Outstanding tax or statutory issues.
Topics
General guidance only
This article describes how the rules are structured. It is not advice on your circumstances, and tax legislation in Zimbabwe changes regularly. Speak to us — or to another qualified adviser — before acting on anything here.