Start Ups – 10 Tips on How to Get Your Bank to Say "Yes"

Our breakfast sponsors, Hartley Fowler, share their top tips for getting the bank on board with your Start Up business. 

When you’re starting a business you are likely to need to find a way to raise finance for things like premises, equipment, insurance, legal and professional fees and wages.

Banks are the major source of finance for small business in the UK. When applying for finance from your bank it helps if you follow these procedures...

1.     Always produce a business plan. The main areas that need to be covered in a business plan are...

•     The management team’s background with details of qualifications and experience.
•     The type of business.
•     Previous trading history.
•     Details of the market in which you are going to trade.
•     Likely extent of the competition.
•     How you will market your business.
•     A cash flow forecast for at least the first 12 months that demonstrates you can meet the loan repayments and a project profit and loss account and balance sheet.
•     Your break-even point.
•     A SWOT analysis of Strengths, Weaknesses, Opportunities and Threats.
•     Details of any expert advice you have sought.
•     How much you want to borrow and over how long.
•     Commitment from the borrower.
•     What other sources of finance you will be using.
•     Security being offered.
•     What savings, investments and other assets you have.

2. Produce a 2-page summary of the plan.
3. Ask for a 25% longer repayment than you need and 10-20% more money than you need.
4. Send the plan to banks with an invitation to visit your premises.
5. Prepare before meeting the bank manager. Think of the questions that are likely to concern him and have your answers prepared.
6. Always negotiate the interest rate and terms after the offer has been made, not before. There is normally an arrangement fee of at least 1% for bank loans.
7. Offer a charge on assets rather than personal guarantees.
8. Try to avoid personal guarantees but if you have to give them ensure they are limited to the amount of the loan.
9. Do not agree to too much security - only agree to the bank's maximum exposure to loss.
10. Get the agreement in writing.

It helps to keep a good relationship with your bank and you can do this by:

• Keeping to agreements made - making payments on time, not going over your agreed overdraft limit, etc.
• If you are going to go over the limit or default on payment, warn them in advance.
• If there is bad news, let them know and let them know what you are doing to do to remedy the situation
• Supply them with any information they require on time.
• Try to prepare the bank in advance for requests for additional finance.
• Borrowing for the right reasons.

How we can help you

We can assist in advising on the most appropriate source of finance for you and in putting together your business plan.

Hartley Fowler LLP are chartered accountants, registered auditors and tax advisers based in Brighton and can assist with the full range of accountancy, taxation and business support queries.

Contact us on info.btn@hartleyfowler.com or call 01273 202311.

Thank you to Hartley Fowler for writing this blog 

Our breakfast sponsors, Hartley Fowler, share their top tips for getting the bank on board with your Start Up business. 

If you want to contribute to the Chamber blog, contact us on hannah@brightonchamber.co.uk