In the Part 1 of this series Master-guide to Financing your Business, we discussed stages of SME growth and optimal types of funding for every stage of growth.
All fund providers do have criteria and documentation requirements for pre and post approval of the funding application. Some of these basic requirements include good character, cashflow, profitability, ability to scale, condition of the industry, social and environmental impact, sustainability, collateral amongst others.
The SME also has to be able to provide the verifiable documents required by fund providers. Below is a typical list of such documentation requirements:
- A certified true copy of Certificate of Incorporation
- Certified true copies of forms CO2 and CO7
- Up to date company annual returns
- Three years audited statement of accounts or a complete set of management report signed by two directors of the company
- Bank statements for 1 or 2 years
- A feasibility study report/business plan
- Proforma invoice(s) and or evidence of funding purpose
- Evidence of license/permit from relevant agencies where applicable
- Evidence of availability of counterpart funding (for new projects)
- Copies of title of documents that are available as security/collateral; and
- Tax clearance certificates for the company and 2 directors
- SON/NAFDAC certification or other applicable licenses or permits
Most of these documents should be available in the normal course of business even if you are not seeking finance. However, many SMEs typically do not have accounting systems and do not audit their accounts annually. They also do not have a business plan and avoid seeking licenses or permits due to the perceived stress and cost involved. Thus when the SMEs are required to present these documents as part of the funding documentation it becomes a problem because they are trying to get all the documents within a very short period.
At Highnet Resources we help businesses get the documentation required by fund providers either directly by preparing the business plan or feasibility report while other documents will be arranged through third parties such as accountants, accounting software providers, auditors, tax consultants, CAC consultants and more.