In the third of our series of accounting blogs Debbie Boulton, director of Richardson Swift, looks at how local businesses can improve their chance of securing bank finance.
Top tips to securing bank finance
Most UK businesses will need to apply for finance through Bounce Back Loans or the Coronavirus Business Interruption Loan Scheme (CBILS) at some point during the crisis. And whilst some loan applications are being turned around quickly, many are taking weeks and are then failing, so it’s worth planning ahead.
the right boxes
credit is often beyond the remit of any individual relationship manager, even
if he or she is sympathetic and knows your company well. Banks and financiers
will need convincing evidence that an SME has a real need for the money and a
robust plan to repay it.
saying that “by failing to prepare, you are preparing to fail” has never been truer.
And whilst each case is individual, your chance of success could be vastly
improved by actioning the following points:
Prepare a business plan – a detailed business plan is essential to any
request for bank finance. Reams of figures are not enough – they must be
presented in ways that the bank can understand and trust.
Present your case – the bank will not only want to see detailed cash flow, profit and
loss accounts, balance sheets and liquidity reports, it will want to be sure
that you demonstrate the need for a loan and how it fits into your business
plan to further the company.
Do your research – financial forecasts and business plans must be well grounded and
banks will want convincing that firms understand their markets thoroughly and
are realistic about their future prospects.
Be accountable – if a loan is granted, there will be strings attached. For
example, in some loan terms, banks will demand oversight of the accounts every
quarter. A regular covenant agreement is highly recommended.
Good housekeeping – businesses should have a strong grasp of their
financials all the time, not just when they are seeing their bank. It’s also crucial to keep your financial affairs
up to date throughout the lockdown to avoid delays with any future loan
An increasingly popular option
for businesses is to outsource their finance functions. We can prepare
management accounts and provide clients with the equivalent of a virtual
finance director, making it easy for us to assist them with credit
For further information and advice on accessing finance or our Coronavirus business support services, please see our website, or contact Debbie Boulton on 01225 325580, or email: firstname.lastname@example.org