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How to get bank funding in five essential steps

Guest post by: Guy Rigby

Article Overview: As we all know, persuading your bank to give you funding is a much trickier business that it used to be. So if you're an entrepreneur or growing company relying on bank finance, it is essential to have a healthy relationship with your bank.

How to get bank funding in five essential steps

Here are five key steps that will help inspire confidence in your bank and help reach a successful funding agreement.

1. Be professional Plan ahead for meetings. Presentations should be detailed, accurate and realistic, showing an appreciation of the risks and how these can be mitigated. Always adopt a professional approach to seeking or renewing your debt facilities. Make sure that you are offering adequate security. Focus on the positive but recognise weaknesses and set out actions to address them.

2. Build trust Banking relationships are built on trust. Keep in touch and keep your bank informed at all times, not just when you need their help. Focus on the positive, while being open and transparent and alerting them to potential threats.

3. Be practical Take care not to breach your banking covenants and deliver financial information and other documentation in a timely manner. Remember that perceptions are generally regarded as reality, so don't create bad ones!

Be proactive with business updates. Voluntarily provide regular copies of business plans, financial projections and reports before you are asked.

4. Show quality The quality of your financial information is paramount. Provide reliable information and supporting numbers which are comparable over different time periods. Bad or insufficient evidence of your financial position and prospects may lead to your bank assuming the worst. Avoid this at all costs.

5. Be prepared Make sure you understand who and what you are dealing with. Banks are protecting their weakened balance sheets and adopting tighter lending criteria, so be sensible with your requests and understand that margins and fees may have increased.

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Article Tags: bank finance, entrepreneur, funding, help, relationship



Related Forum Posts
Re: How to Get Your Business Funded - A business plan is essential for your enterprise. Whether your business is starting up or already established , it's the road-map for future development. However , perhaps most importantly , it's a key document when you are looking for business funding - whether applying for a simple overdraft or looking for new investment or capital. It must help investors and lenders understand your vision and goals , explain how you are going to spend the invested or borrowed money and set out how this will benefit both them and the business. This explains what you should include in your business plan and how you should present it to potential investors, shareholders and your bank......................
Re: How to Get Your Business Funded - [quote="intelemark":3hn9vdrv]small business - bank loan will work. [/quote:3hn9vdrv] The problem with this statement is that due to the stringent requirement criteria, the majority of entrepreneurs don't qualify for bank loans. SBA backed loans' basic requirements include: * 20% cash infusion by requestor * excellent credit score * industry experience * strong collateral If even one of those is missing from the equation you cannot even apply. For small startups you can also try peer to peer lending, but even they require strong credit scores and the interest rates can be quite high. A new funding option has been developed, peer to peer giving. Entrepreneurs funding entrepreneurs is a new, innovative concept. See the blog below for more info.
Re: Sources of Cash - Don't forget about merchant cash advances - a reliable funding source for many small businesses who have had trouble receiving loans from a bank.
Re: Can a non-US citizen create a LLD/Corp in US without being - A friend of mine tried to do this. They got the company set up but cannot create a U.S bank account (an essential part of the process). They were told new laws prevented U.S banks being opened by proxy, you had to go there in person. I'm not 100% sure if this law is true, but that is what happened to them.
Suggestion for an Entrepreneur Looking for Funding - I am new to this forum but have been actively assisting my husband with his cash flow business for a number of months. One issue that I have seen that often occurs from those looking for funding is the lack of paper work that is needed when a funding request is presented. It is so vitally important for an Entrepreneur to have their paper work up to date (business plans, executive summary) before they look for funding. In addition, it is so vitally important to keep in touch with the funding source to expediate their funding project.


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