Making the most of your bank - checklist

Making the most of your bank - checklistGetting bank finance isn't easy these days - but working with your bank and cultivating an open, honest relationship with them could help. Here's how.

  • Find out which individuals you will normally deal with. Meet them and aim to build a personal relationship.
  • Help the bank to have confidence in your business - show them your business plan and be prepared to explain key figures and projections in detail.
  • Invite your bank contact to visit your premises to meet key employees and to get a better understanding of your business.
  • Use your budgets to forecast your cash flow. Give the bank as much advance notice as possible of any anticipated financing needs.
  • Build a safety cushion into your financing and consider worst-case scenarios.
  • Always keep the bank informed; let them know when your plans change.
  • Investigate the availability of loans and other forms of finance for long-term requirements rather than relying on your overdraft.
  • Consider fixed rate loans (if available) to help with cash flow planning.
  • Keep an eye on your credit rating and improve this if possible to increase your chances of being accepted for loans.
  • Always ask for a clear explanation of all the costs involved in borrowing - for example, arrangement fees - as well as the interest rate.
  • Shop around for quotes to put yourself in a stronger negotiating position.
  • Negotiate if possible - ask for better interest rates, for charges to be waived and for any security you provide (eg a personal guarantee) to be limited.
  • Manage account balances; use online banking to reduce costs and increase efficiency; move any spare cash the business may have to an account paying a higher level of interest.
  • Investigate whether other services the bank can provide (eg credit cards, insurance, pensions) are competitive.
  • Keep your promises to the bank and be honest: provide information when you say you will, make payments when they are due, stay within your overdraft limit.
  • Warn the bank immediately if you face payment difficulties to work out a solution together.
  • If you're refused a loan, keep lines of communication open and ask how you could improve your future chances.
  • Ask whether the bank takes part in the Enterprise Finance Guarantee scheme. This guarantees loans to smaller businesses which don't have enough security or a proven track record.

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