It is like a persistent echo - this complaint that small businesses are, too often, ill-prepared when they head for their banks to apply for loans.

Maxia Fairweather, business development manager, has been through the ropes of asking about this, or that, missing document and advising clients about what is required to complete their applications.

In the following, Fairweather outlines for entrepreneurs an essential portfolio as they prepare to talk to their bankers.

Prepare a business plan

The proposal or business plan is required as a part of your loan application process. We need to know about your business, those who manage it and the experience they have in the project you are asking us to finance. We need to know what the project is, the full costs and how much we are being asked to lend.

The borrower must pay between 20 to 30 per cent of project cost. No one will receive 100 per cent financing. If you believe in the project, then you must be willing to cover some of the costs. Also, the less you borrow, the less you will pay back.

For the completion of the business plan, Google 'business plan' and you will get a basic template, or visit the Jamaica Business Development Corporation, which provides this service. There are also people in the Private Sector Development Programme who help with plans at a discount.

Get approvals and licences

Entrepreneurs who may need to borrow should ensure that they have the necessary documents ready.

Depending on the type of business, we need to see that you have have the relevant approvals and licences. If you are going to do a construction project, you will need approvals from the parish council, the National Environment and Planning Agency, and you will need to be licensed to carry out that type of construction. We don't want to lend to a business and then the parish council comes and closes the project down.

Sale agreements and invoices are important

If you are using the loan to purchase property we need to see a copy of the sale agreement. For equipment or vehicles we need to see the invoice. For construction we need to see estimates certified by a quantity surveyor.

Bank statements are necessary

We need to see the last 12 months of bank statements if you do not bank with us. We need to see how you have have managed your account for the last year. If the account shows frequent overdrafts without an overdraft facility that is not good. We do not ask for savings statements, we ask for current accounts. We need to see the pattern of deposits and how the account is managed.

Bring audited accounts

Other things that we ask for include audited accounts for the last three years if applicable. Depending on the amount requested, if you do not have audited accounts we will accept drafted accounts done by the company itself. This will be matched with the current account records. Unless you come to us in the first month of the new financial year, we also ask for the in-house position to date.

In addition to three-year accounts, you will provide for the months ensuing since the start of your new financial year so we have an understanding of the current position.

Banks want credible cash-flow projections

We also ask for cash-flow projections, because you say to us you need a loan and you will be able to afford repayment over a set period. We need to see how you have projected earnings and get an indication of how this will happen in the next 12 months. For the next 12 months, show month by month how much you are projecting to earn. Payables should also be shown line by line. These should include utilities, insurance, stationery costs, salaries, motor-vehicle expenses, and all expenses that the company normally incurs accounted for line by line with full details for the 12-month period. For the period following, one can can do it in quarterly summaries.

List receivables and payables

We also ask for a detailed and aged listing of receivables and payables. When we look at financial statements, they are going to indicate a total figure for each of these. We need to see receivables by the period owed to see how much has been owed and for how long. Once it passes 90 days, debt becomes difficult to collect. If one sells on credit, one must give an indication of effort to collect from debtors.

Tax compliance certificates are important

We also need a valid tax-compliance certificate, or TCC, because we need to know that whoever we are doing business with are tax compliant. If the Government goes in and says you owe them taxes, our debt will rank second to this demand. We are asking for these things to make a proper and informed decision.

Company returns should be up to date

You also need show evidence that they have filed annual returns with the companies office. If we lend you money and the Government makes a demand for unpaid taxes, you will have to pay the Government first.

Have available titles to be used as security

If the loan has to be secured, you will also need to give us a copy of the title which will be used to secure the loan and a copy of a recent valuation.

According to Fairweather, with these documents in place, the financials will tell how profitable the business has been and is likely to be in the future.

"You do not want to be lending to a business which has been making a loss for the last three years. In this case, we will be looking to see what caused the loss and how confident we can be that an injection of cash will result in a viable project."

Email Maxia Fairweather at fairweathermp@jncb.com.