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Does your bank really understand your business?
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Does your bank really understand your business?

Posted on the 31st Oct 2014 in the category Access to Finance


In this challenging environment, first impression really does count when it comes to seeking finance

 

Banks are cautious and sensitive to risk (or perceived risk) given the uncertain economic outlook and impact of financial regulation

 

It is therefore vital that a request for finance conveys the most compelling case possible to ensure it gets a fair hearing within the bank and is robustly supported when presented to their credit department

 

It is standard practice of banks not to share with you the application they have prepared for submission to their credit department and yet this document is key to the decison making process and will determine whether the request for finance is approved or not

 

Is the credit application right, wrong or indifferent to the case for finance? Does it value or undervalue your business?

 

How can you be sure therefore that the bank's credit department has fully understood your business?

 

The outcome of a borrowing request relies on the experience and expertise of the bank relationship manager to ask you the right questions, gather information about your business (both financial and non financial), the reason for the request for finance and source of repayment, to analyse and interpret this information, and to robustly present this to their credit department. Given the complexities of international trade it is no surprise therefore that many lending applications for businesses who import or export fail

 

Take control

Given the success of a request for finance is vital to the growth and longevity of your business, it is important to take control by making YOUR OWN well articulated, structured, and compelling case for finance and to present this in writing to the bank

 

This will ensure that the business case for finance (upon which the bank's credit application will be based) is a true and accurate representation of your business, and presents the strongest case possible for finance. This should also be used to lead the interpretation of the information and tackles at the outset anticipated questions or challenges and provides risk mitigants

 

It is therefore important that the business case for finance is written from a banker's perspective and addresses the key areas of risk and consideration

 

We shall show you how to do this in our forthcoming series of articles "top tips on presenting a case for finance"

 

If you wish to receive future editions from our series "Top tips on presenting a case for finance" please email us at stephen@axstradefinance.co.uk or complete our enquiry form on our "Contact us" page


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