How your accountant can help you get a business loan

Already one of your trusted advisors, your accountant can be a tremendous asset to the process of applying for bank financing.

Already one of your trusted advisors, your accountant can be a tremendous asset to the process of applying for bank financing.

Your accountant already knows your business and personal finances so he or she can likely recommend an ideal financing strategy for you – based on your situation and your plans. Plus, because your accountant works with so many other businesses, he or she can share some financing best practices.

In addition to standard year-end services such as preparing financial reports and filing tax returns, many accountants today are offering what’s called business advisory services. Helping clients to prepare loan applications is one of those advisory services.

Here’s how your accountant can help you to prepare a successful bid.

1. Financing qualification

You might think your business needs the loan but your accountant may have other ideas. One of the best roles an accountant can assume in this situation is to help you communicate why you think you need financing, how the money will be used, and why you think a bank is the best source for that financing.

  • Ask your accountant to help you articulate the purpose of the loan. Is it for expansion? Debt relief? Seizing an opportunity? Practice convincing your accountant that you need the money before you talk to the bank.
  • Based on your future plans, ask your accountant to explore with you various options for financing so you can decide if a bank loan is truly the best option. For example, if your business is ready to expand internationally, other forms of credit such as factoring may be the ideal financing choice.
  • Because your accountant understands your stage of business lifecycle (start-up, growth, maturity and decline) he or she can recommend the best financing strategy for your business. For example, if you plan to sell the business soon, it might not make sense to take on more debt because that may turn-off potential buyers.

2. Quantifying the application

Once you’ve determined that your business does require outside financing, it’s time to see what that looks like in terms of real numbers. It’s important to understand the impact of financing on your business in the short and long term.

For example, your accountant can assess your current and projected cash flow so you can pinpoint the amount of money you can afford to borrow.

Your accountant may also provide industry benchmarks so you can compare your finances to similar businesses. Industry standards for measurements such as liquidity ratios, for example, may give you sufficient comfort to proceed with the application or alter your plans.

Bottom line: the amount of money you think you need may be different from what your accountant sees. So it’s in your best interests to hear them out so you may proceed to present a specific request to your bank.

3. Presenting the application

Having your accountant put together the information required for the loan application may improve your chances of the bank approving your request. Some financial institutions prefer to receive financial statements that have been reviewed or audited by an accountant.

Your accountant can also walk you through the lending process so you can prepare any information the bank may request, such as:

  • Borrower profile. The lender may want to know who is borrowing the money (the corporation or the individual).
  • Repayment ability. The bank will naturally want to see cash flow projections with repayment figures in place that demonstrate an ability to support the loan without negatively impacting business operations.
  • Available collateral. The lender will want to know about assets available to secure the loan, if required.
  • Credit check. Be prepared for the bank to request a credit check on you and/or your business. Your accountant may help you to address any questions that may arise from this check by discussing your credit history with you prior to submitting a loan application.
  • Terms of the loan. Your accountant can advise you when it comes time to negotiate the terms of the loan so you can get the best deal for your business.

Accountants in Canada have the skills and perspective to help make your loan application successful. Consider working with your accountant to help qualify your financial needs, quantify current and future business performance, and to create a winning submission.

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