How To Get Your Bank To Say "Yes"

Hello %%First Name%%

Nearly every business has to go to the bank for funding assistance at some point, so I thought it would be helpful to outline some of the key ways to help yourself in getting the bank manager to say "yes".

Banks are the major source of finance for small business in the UK. When applying for finance from you bank it helps if you follow these procedures...

• Always produce a business plan. The main areas that need to be covered in a business plan are...
  • The management team background with details of qualifications and experience
  • The type of business
  • Previous trading history
  • Details of the market in which you are going to trade
  • Likely extent of the competition
  • How you will market your business
  • A cash flow forecast for at least the first 12 months that demonstrates you can meet the loan repayments and a projected profit and loss account and balance sheet
  • Your break-even point
  • A SWOT analysis of Strengths, Weaknesses, Opportunities and Threats
  • Details of any expert advice you have sought
  • How much you want to borrow and over how long
  • Commitment from the borrower
  • What other sources of finance you will be using
  • Security being offered
  • What savings, investments and other assets you have
• Prepare a summary. Produce a 2-page summary of the plan - bank managers love this!
• Ask for more than you need! Ask for a 25% longer repayment than you need and 10-20% more money than you need.
• Invite them to you. Send the plan to banks with an invitation to visit your premises.
• Prepare before meeting the bank manager. Think of the questions that are likely to concern him and have your answers prepared.
• Agree first, negotiation second. Always negotiate the interest rate and terms after the offer has been made, not before.
• Avoid personal guarantees where possible. Offer a charge on assets rather than personal guarantees, or limit the personal guarantee given.
• Minimise security. Do not agree to too much security - only agree to the bank's maximum exposure to loss. This keeps it available for any other borrowing you need.

It helps to keep a good relationship with your bank in getting them to say "yes" and you can do this by...

• Keeping to agreements made - making payments on time, not going over your agreed overdraft limit, etc.
• Warn them in advance, if you are going to go over the limit or default on payment.
• Tell about bad news. If there is bad news, let them know and let them know what you are doing to do to remedy the situation.
• On time. Supply them with any information they require on time.
• Advance notice. Try to prepare the bank in advance for requests for additional finance.
• Borrow for the right reasons.

For assistance in preparing business plans and cash flow or profit projections for bank funding and for any of your accountancy and tax needs, please give me a call. I'm very happy to visit you without charge for a consultation to discuss how we could help you further.