Business Survival III

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.

Ticking the right boxes

Arranging 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. 

The 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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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 applications.

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 applications. 

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: