When it comes to approaching a bank for credit, many people are unsure as to what they will need to do.

We try to make this process as straightforward as possible; here are some quick tips on applying for credit.

1. Prepare your paperwork

You will need to produce information to support your application. Typical documents requested from your bank may include cash flow projections, up-to-date management accounts, aged debtor and creditor listings, business bank statements (applies if you are moving from another bank), proof of customer contracts, or a brief action plan for your business. (For a complete list of documents required, see our booklet ‘Our financial advice guide for your business’) .

2. Calculate how much you need

Make sure you apply for the right level of funding. Carefully calculate the exact amount you need. For example, when making a large purchase or investment, there may be hidden costs, which could end up eating into your cash reserves if left outside the loan calculations.

3. Collateral may be required

As part of the terms of borrowing, security or collateral may be requested. The level required is determined on a case-by-case basis, depending on the level of risk inherent in the application.

4. Other areas under consideration

A number of factors are taken into consideration when assessing loan applications, including your character, track record and credit history, your ability to repay the debt, and the purpose of the loan. The bank will also conduct a review of the market you operate in to assess external risk factors.

Every financial institution uses a risk rating system to assess each customer on an ongoing basis. This takes account of factors such as your bank account activity, changes to the business and financial statements. The risk rating assessment will also have a bearing on the rate of interest offered on the loan.

5. Quick turnaround

The good news is you won't need to wait long for a decision on your application for credit. Normally, you will hear from the bank within two to three business days.

For more detailed information, visit www.bankofireland.ie/advice, where you will find our “Financial Advice Guide for your Business”.