With so much emphasis being placed on small business being the driver in the economy and effectively our Government looking to small business to help achieve the 6% plus growth rate required, you would think that it would be easier for small businesses to get funding number one and then of course for the small business owners to be able to enjoy property ownership as major drivers of the economy.
We understand that banks are risk averse and there is strong evidence on the high failure rate of small businesses but for goodness sake, draw the line somewhere so that small business owners know what to aim for. For example, be less stringent with a small business owner who has been in business for 5 years or more, has shown steady growth over a period of time or something similar. Self employed people seem to be simply stamped “NO” as soon as the banks credit vetting departments see you are self employed.
So how do you get a bond if you are self employed?
Statistics show that only about 40% of self employed individuals were granted bonds in 2013 and I suspect this was the self employed people with larger businesses than the average guy who runs a small business.
The crucial element in my mind is to show that you receive fixed amounts into your personal bank account on a monthly basis and preferably on the same day of every month. This would show the bank that there is consistency over a long period of time and if these salary/drawings payments are backed up over a long period of time with stability in the companies books, I can see absolutely no reason why the motivation for approval should not be put forward.
Prepare your personal expenses as well as providing management accounts, financial statements and any other financial information that will make the person reviewing your bond application take a harder look at the application. make your application stand out… make a thick file full of supporting documentation. You know you can afford it, help the bank understand what you know.
Of course you need to make sure that your credit history is clean and in good standing and of course that the company also has a solid positive credit history.
The best way to get your bond approved would be to use a bond originator who will help you prepare the paperwork for the application and has a vested interest in your bond being approved. Bond originators make a small percentage commission on the value of bond once registered so they are as keen to see you get a bond approval as you are.
The next step to making sure that your bond costs you less is to get Bond insurance that is the lowest you can possibly get. Request bond insurance quotes.