Financial Guide for SMEs - SME Corporation Malaysia

Financial Guide for SMEsExample of Statement of PurposeAs a result of a new sales agreement with XYZ, our business will requirean increase in stock purchases to fulfil the contract requirements. Thefunding will support this business growth through the purchase ofadditional stock. This contract will increase annual revenue by a minimumof 20%.If the loan is to be used to purchase an asset (i.e. equipment or property), or for acontracted service, then provide the lender with all the important documentationthat you have gathered relating to the purchase. The important documentsshould include any agreement or contract to be signed, quotations for the assetor service, any specifi c requirements for the installation of the asset or provisionof the service etc.It is imperative to link the purpose of the loan to the overall business benefi tsthat will be achieved as a result of the additional funding. It is also importantat this point to state when the funds will be required. We often underestimatehow long it will take the bank or lender to process the loan application andthis can have an adverse effect on the business if the funds are not availablewhen required. Make sure you submit your application with plenty of time for theassessment to take place.The Amount of the LoanThe amount of funds required will be determined from your planning. Whetheryou are starting up a business, or funding an existing business, the planningstage will be the same. In a start-up scenario, the planning will be undertakenas part of the initial business planning process. For an existing business, a newbusiness plan should also be prepared. It is good fi nancial practice to revisityour business plan when key elements of your business change.In order to determine the total amount of funds required, you will need to preparea cash fl ow forecast. This forecast must be prepared as if the loan has beensuccessful and should cover the expected duration of the loan. All of thesedetails are covered in Chapter 6.135chapter 7-13 p79-181 Eng.indd 1358/15/11 5:03:04 PM