In recent years, many business people have worked so hard to survive that thoughts of borrowing money to expand have been far from their mind. There is also a widely held perception that ‘the banks aren’t lending’ so why bother asking?
It is certainly true, and somewhat ironic, that the banking sector has been a major contributor to our woes and yet, in trying to tidy up their act, the regulatory controls now in place force many banks to focus on their own balance sheets ahead of supporting those of their customers.
In terms of standing the best chance of getting a positive answer, the following points should come as no surprise to many:
- Know your business inside out and be prepared to explain its products/services and track record
- Have an up to date business plan (written by you!) which should include a SWOT analysis
- Demonstrate your own skills and abilities and why you (and your senior managers) are the best people to be running the business – include CV’s in the business plan
- Explain why you need a loan – amount and purpose – and how the business will repay it
- Understand the financial history and projections for your business
- Share the risk – you will be expected to have put your financial contribution in first
- Recognise that you may have to pledge some security
These points are largely common sense but many loan requests don’t include all of the above.
Of course, none of us are experts and there are lots of places to seek professional help before applying for a loan. A good accountant should be able and willing to help you. Also don’t forget to ask your business contacts, friend and family for their thoughts too.
Loan applications are often seen as a tick box process but there is always the need to gain the support of the manager handling the request so that he or she becomes a ‘Fan’ of your business too.
When you approach the bank, be positive and have passion for your business. Successful businesses rely on great people providing a better customer experience and product/service than your competitors. This is an important point to demonstrate all day every day – not just in front of the bank manager.
At Metro Bank, it is our Customer Experience which sets us apart from the other banks. We open 7 days a week and have local bankers making local decisions in every store. Our rapid growth in customers (we call them Fans!) and further expansion into Kent this year are proof that this is working for us.
Don’t forget that banks are not the only providers of funding available. A good bank manager should be able to point you towards alternative sources of finance especially if that might be better for your business.
Area Director, Metro Bank (UK), Maidstone, Kent
020 3402 7890