preparation are therefore key to successfully securing funding for commercial property . This relates to both how supporting documents and information on the business itself are collated and presented , as well as aspects that position the property in a favourable light as a good investment .
Apart from the documents required for FICA purposes , SME financiers and other financial institutions will require a detailed business plan as part of the application . This will need to be accompanied by a strong finance proposal backed by the business ’ annual financial statements .
Some of the factors that financiers consider when reviewing funding applications include the credit history of the business and in many cases also the credit record of the owner .
Arguably the most important aspect that will be reviewed is the state of the business ’ cash flow management . As our quarterly SME Index continues to demonstrate , cash flow remains the number one challenge for South African SMEs . As such , applications need to shed light on whether consistent , adequate and sustainable cash flow will be maintained over the loan period and how any potential shortfalls will be subsidised .
In terms of the property itself , financiers may require applicants to provide information on the history and current condition of the property , including aspects such as whether it has been well maintained and if any major structural issues have been identified . Required documentation will include the purchase agreement from the estate agent or current owners , as well as any rental agreements that may apply to current or future tenants ( in the case of plans to sub-lease ).
Apart from its financial viability , the location of the property will play a pivotal role in the decision-making process . Financiers will consider aspects such as crime rate , the reliability of public services in the area , proximity to competitors ,
SA Real Estate Investor Magazine NOV 2022 119