Magazine article Management Today

Crash Course in ... Getting Bank Finance

Magazine article Management Today

Crash Course in ... Getting Bank Finance

Article excerpt

Times may continue to be uncertain, but forward-thinking businesses still need to invest in order to improve.

But the banks - far from lending you new money - seem intent on battening down the hatches. What can you do to stack the odds in your favour?

Pour yourself a Campari. It's actually the mnemonic - character, ability, margin, purpose, amount, repayment, insurance - by which banks assess lending proposals.

So measure your company against each of these factors.

Shop around. 'One bank manager may turn you down, while another in the next bank or even the next branch may not,'

says Russell Snowdon of Independent Banking Consultants. 'Speaking to more than one lender increases your chance of success and also lets you compare terms.' Look at other sources of finance but, remember, the commercial intermediaries market is unregulated, so choose your adviser carefully.

Be ready to haggle. 'Terms are nearly always negotiable,' says Snowdon 'It's possible to improve price, security, the amount available and the covenants and conditions of the loan.'

Don't under-borrow. It's better to borrow the amount you really need than to come back in a few months asking for more. Doing the latter suggests you may not have a grip on where the business is going, says British Bankers' Association spokesman Brian Capon.

Take some of the pain. Banks know personal guarantees can't always be enforced, but they like you to show commitment, such as by putting in some of your own money. …

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