Getting financial support from your bank
How to approach a bank if your business needs funding
Few businesses can get off the ground without some initial funding. We outline the key things to do if you’re approaching your bank for financial support.
Create a comprehensive application
A good application will include a lot of detail about your business and the plans you have for it. This can help you in 2 ways: it may enable a swifter decision from the bank, and it can help you to focus on the right things.
Consider including the following to be in the best position and to potentially speed up the decision process:
- Your previous experience (where relevant)
- The reasons you are seeking financial support
- How you’ll afford the repayments – including any changes to business that mean you’ll be able to afford them, if you can’t currently
- A financial forecast for your business – explained further in the next section
Forecast your finances
It’s important to create a clear and comprehensive financial forecast – it will help you to manage your business and set realistic aims. It’s also an encouraging inclusion in the eyes of those who might lend to you.
Calculate expenses first, including:
- Office rental and upkeep – such as utility bills
- Staff – including their salaries and equipment
- Legal fees
- Phone and internet
There may also be variable costs, such as the price of the goods you are selling, that you should also take into account.
After that, you’ll be ready to create your revenue forecast. This should be realistic – though don’t be afraid to be optimistic – with sound, substantiated ratios.
As your revenues grow, they should exceed your expenses. It’s important to predict when this might happen, but be realistic – a misjudgment may mean you aren’t asking for enough by way of financing.
You should present all of the vital information up front in an open and honest way, including any irregularities or potential problems. If not, they will be discovered later on and may cause a delay in the process – or even stop it altogether.
Integrity of the business and its owner is an important part of a lender’s decision. For example, if you’ve been discharged of bankruptcy in the past, but declare it in your application and provide explanation, the bank may still proceed with caution. If this is discovered later, however, the integrity of your application may be called into question.