Clearview North October 2013 - Issue 143 - Page 81

BUSINESSNEWS HOW TO MAKE THE BANK SAY “YES” The Federation of Small Businesses (FSB) and the British Bankers’ Association (BBA) joined forces during Small Business Advice Week back in September to give small firms clear advice on what they need to do to get a loan. With independent research showing that around three in 10 small firms are refused finance each quarter, the two organisations joined forces for the first time to give their top tips on what businesses need to do to give them a better chance of the bank saying yes to their application. ‘The bank will base their decision on the information supplied to them, so making sure that it is robust is vital’ John Allan, National Chairman, Federation of Small Businesses, said: “The bank will base their decision on the information supplied to them, so making sure that it is robust is vital.” The top five tips are: • Develop a robust business plan: A clear business plan is key, not just to get finance but for growing the business too. The plan should be a living document that evolves as the business grows and takes into account changes in the market as well as the financial situation of the business. A well-thought, comprehensive plan will give the lender confidence in the projections made. To read more, visit • Build financial understanding: To have a successful credit application the business must be able to show they understand key numbers such as turnover, profits and existing debts as well as being able to show how the debt will be repaid. • Check your track record: When making a lending decision the banks will look at how previous lending has been managed in the past so knowing the credit ratings of the business owner as well as the business itself is vital as is having an understanding of what affects it. • Be honest: Be upfront about how much money the business needs as well as what it is needed for. Underestimating how much is needed may affect the lenders confidence in the owner’s ability to manage company finances and overestimating profits and revenue could affect the ability to repay. • Keep talking: Communication with the lender and getting feedback is important, as a ‘no’ now might not mean ‘no’ in the future. The lender should be able to advise how to change the business model to secure finding and what elements of the business plan could be more robust. For those businesses still refused there is an independent appeals process, which has been agreed by the main UK high street banks. John Allan continued: “Businesses that are refused finance can appeal the decision. The latest figures show that many firms that do appeal have the decision overturned.” OCT 2013 81