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How to Apply for Mining Finance

How to Apply for Mining Finance

Financing your mining project can be expensive. This is especially true if you will be using your own funds to start it off. But you can also apply for mining finance from your finance providers, which provides an afforable alternative to having to scrape the funds together. 

If you would like to apply for mining and construction finance, there are financial institutions several options to choose from. For example, you could apply for bridging finance to help cover the gap in funds, you could look for full maintenance leases for your equipment or invest in operating rentals for a shorter project. Not sure where to start? Below is some helpful advice on applying for mining finance. 

 

Start by gathering your documents

The first step for any loan application is to ensure that your documents are in order. You will need to have them ready and correct before you fill in any forms, and the documents you will need are listed below:

  • Company registration documents, including the VAT number
  • Your banking details as well as up-to-date balance sheets
  • Up-to-date contact information, including the company address
  • The director and trustee banking details
  • Accurate details of the asset you want to finance

These documents will help the lender to decide on whether or not you qualify for financing and what the interest rate will be for your loan. 

 

Get your credit in order

Once you have gathered your documents, you will need to know what your credit history is. This is because you will need to discuss any discrepancies with the credit bureau which could affect your loan application. 

You will need to know both your own personal credit rating and your business’ credit rating because the lender will be doing the same. If your score is below 680 points, it is likely that your application will not be approved. You can improve it by repaying any debts that you or your business owe and making regular repayments to any creditors. Be sure to rectify any issues before you send in an application so that everything is up-to-date. 

 

Learn about the different types of finance

Now you have your credit up-to-date and your documents in order, you can move on to looking at the different types of mining and construction finance available. These are listed below:

  • Instalment sale: Instalment sales for mining equipment are simple. Once the loan period is up, you will own the equipment. This will allow you to use it for future projects, saving you money in the long run and allowing you to use this money for other important aspects of your business. 
     
  • Equipment leasing: Leasing equipment is another affordable solution. This is because you can trade in your leased equipment for an updated version without having to sell and buy new pieces. An operating lease is affordable for smaller projects. And you can lease new equipment as jobs come in, avoiding monthly payments for equipment that is not in use. 
     
  • Bridging finance: Bridging finance is useful for those who are in the preliminary stages of their project. Banks offer a short-term loan to mining companies because they know that the company will be able to repay it at any time. Some lenders will ask for collateral for bridging loans, but the loans are easy to pay back and apply for. 

You will need to decide on an option which best suits your needs. For example, a mining project in its beginning phases might need bridging finance to maintain momentum, whereas a mining company looking to upgrade their equipment could choose a lease payment option for the duration of the project. 

 

You will need a business plan

All business loans need a sound business plan, even those for mining companies. This is because you will need to prove to the lender that you can repay the monthly instalments. It will also give them peace of mind that you are not a risk and that you have a steady cash flow. 

Your business plan will need to include a description of your company as well as any equipment you will need to purchase or lease. And you will have to provide evidence that you are making a profit with your projects, enabling you to repay the loan. Lenders will be more likely to approve your application if they have tangible evidence that your business will be able to pay them back. Be sure to provide financial records with this business plan so that your lender has a clear picture of your situation. 

 

Conclusion

Applying for mining finance might sound difficult, but, if you know where to start, it will be a breeze. You will need to know your credit score and have all important documents ready. You will also need to have a business plan in place so that your bank can see you are not a high-risk client. Then you can ask about the different types of finance solutions available and find one that best suits your needs. 

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