How to secure bank finance

Everyone needs finance from their bank at one point in their business life. Bank finance comes in many different forms from a simple bank loan to an extension of your overdraft. Here are some tips on how to get your finance every time.

Yes - you do need a business plan

No bank will entertain the idea of lending you money unless you can discuss your business plan with them. This means all sections fully complete as well as robust and well prepared financial statements.
But you can’t just prepare any old business plan. For a start it must be in the format they are expecting and know and love. Otherwise confusion will reign.
Your financial projections can’t just be pie in the sky. Have a look over your financials. Are there really that many customers? Will they really pay that much? Will you really make that much from each sale? And will sales really increase at the rate you are forecasting?
The answer is probably not. So be realistic. Give your business plan to someone to read before you go to your bank.

Ask your bank what they want from you

The best course of action with any lender is good communication.
Before you turn up at your first meeting telephone ahead of time and ask what they are looking for from you. Chances are they want your business plan. Not just any business plan. Most lenders expect plans in a certain format or they are looking for something specific when they start to read your plan. Ask them first exactly what they are expecting from you before you meet them. Additionally they may want other information such as some proof of identification as well. Just ask them.

Your bank meeting

OK your first meeting is important.
Remember this is a sales exercise 100%. You are selling your business idea to someone you want money from. After all, you have no right to this cash. You are also selling yourself.
Sell your ideas. Show your business plan. Say why YOU will win and be successful. If you can show you have made sales already (if you are a startup) or your history.
Also sell YOU. You are the person behind the company and it is you and your team who will make anything a success. Any lender or investor lends on ideas and people. If they don’t believe you are the one to make it a success then get someone with you who can.
Make sure you understand your numbers as you will get questioned on these.
At the end of the meeting ensure you understand the next stage in the process. Will they phone you up? Will you have to complete forms? Just make sure you know.

After your bank meeting

So what is next? Do you know?
If you have to go back make sure you meet any deadline imposed. You need to show that you are serious otherwise they may think you are not serious about your business. Jump through hoops if required. It will be worth it in the end because you will have secured the finance you wanted.

If you get turned down

If you get turned down for your bank finance find out why. Really ask what the problem was.
Were you too ambitious? (so tone down your projections)
Did they not like your ideas ? (find out why)
Where you a high risk? (find out why and what you can do about it)
Above all, ask about it. You may be able to do something about it.

Other forms of finance

Banks are not the only people lending business finance. Check out the companies below as well.