Bank Finance

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Finance options available through banks include:

  • Overdrafts
  • Credit Cards – advisable for businesses wanting to borrow a small amount, i.e. less than £5K
  • Loans
  • Small Firms Loans Guarantee Scheme – supported by the DTI with lots of paperwork to prove that your application is viable. This can be a very difficult fund to access and most businesses are rejected

When approaching a bank manager for funding or finance, there are two main criteria against which they will judge your application:

  • Risk assessment of your business
  • Ability to repay your finances

When approaching the bank:

  • Have a business plan drafted, but preferably completed
  • Remember, if a manager understands your business, she is more likely to support it
  • Ensure that your business plan is in a language that your bank will understand – do not include technical jargon.  This might mean that you could have a business plan for potential funders in simple business language, and another for potential creative partners
  • Your business plan should include economic industry analysis and social trends
  • Your bank manager will want to assess the competitive quality of your business – why is your business going to succeed above others?
  • Your business plan should detail a strong management team or allude to the fact you intend to develop one.  This could be implied simply by identifying peers that you intend to involve in an ongoing evaluation of your business.

Bear in mind that banks make decisions on a purely financial basis.  Don’t be discouraged if you are knocked back: keep trying.  Sometimes you

have to revise your business plan or present yourself differently for the bank to want to invest in your business. 

When deciding on the amount of finance to request, consider:

  • Where are your repayments going to come from?
  • Are you able to offer any personal contributions to match the funding?
  • Do you understand your own financial accounts, the forecasting and analysis well enough to discuss them openly?
  • Have you factored in any security that you might have available to underwrite a loan?

Realise that your financial accounts are for your purpose, not the bank manager’s.  They should give you confidence and must demonstrate that your business is viable.