A business plan – or pitch deck – will help funders understand the reason for your company’s existence, however, this just catches an investor’s attention.
Finfind, in their inaugural South African SMME Access to Finance Report, reported that many South African entrepreneurs have limited financial literacy and planning skills which impacts on their ability to access funding.
This lack of knowledge extends to finding funders that match their needs, the type of financial assistance available and what the qualifying criteria are.
All the reasons entrepreneurs need to maintain up-to-date records
Up-to-date management accounts, financial statements and tax clearance certificates are among the most common documents that you will be required to provide.
It is important that entrepreneurs maintain their records in order to help funders assess their bankability and affordability.
Maintaining records also help in understanding the challenges your business faces and to guide growth strategy and can be the difference between success and failure when you approach funders.
Depending on the funder you approach, you will be requested to provide supporting documents that will help them assess your business’s eligibility for funding or viability.
Many of these documents will be acquired in the normal process of creating a legal entity.
Finfind provides a comprehensive list of the documents you’ll need to prepare when you’re ready to initiate a conversation with funders.
To assess a business’s bankability, whether it can afford the funding and to determine the credit worthiness of the business and its shareholders, an investor will ask for:
- The SMEs business plan/project plans, income/cash flow projections,
- Outstanding debtors, signed customer contracts, the latest annual financial, statements, latest VAT statements, management accounts and latest bank statements.
To confirm that your business meets South African statutory requirements a funder will ask for supporting documents that include:
- ID documents of owners, marriage certificates of owners, company registration documents,
lease or mortgage agreement,
- tax clearance certificate, existing shareholder agreements, share register, proof of address and any relevant business licences, accreditations or registrations required.