I have focused this series on the important issue of the Scarcity of Capital for Small Companies, which I believe are the corner stone of the economy.
In this post I want you to challenge your Bank Manager next time you see him. PUSH HIM on the sort of capital that might be available to your business.
You may not be seeking capital now but you have nothing to lose. If you think that you might be seeking capital in the near future, do some reconnaissance and find out whether this bank is likely to help you. If the result is not encouraging, go and meet with some other banks and see what they have to say!
This list is not exhaustive but I hope gives you some ideas for probing questions. If you can add to the list, please do so and leave a comment. 🙂
Knowledge of business
- What do you know about my business?
- Have you visited my website recently?
- How many other companies do you cover? In my sector?
- What view does the bank have on my sector?
- Did you last extend a loan to a company like mine? What were the terms?
- Would it help if I provided you with a Detailed Business Plan and Financial Projections?
- On what basis would you extend a loan to my business
- Would you access the Credit Agency Report on my company?
- How do you decide what to lend to whom?
- Who makes the lending decision?
- What is the limit of the loans you are personally authorised to make
- What is your detailed loan approval process? How long does it take?
- Do you do Debenture Lending (secured only on the assets of my business)? If not why not?
- Would my company qualify for the Government’s loan guarantee scheme?
- How do you structure the repayment profile?
- What sort of overdraft facility could you make available?
- Do you offer invoice discounting?
- Can you offer any lease financing?
- What interest rate would you charge
- How is this defined? Floating over base?
- What do you use for base rate?
- What fees do you charge?
- Are there any due dilgence costs involved?
- What other costs are involved that I need to know about it?
- What term do you lend over?
- Are your loans capital repayment or bullet (all capital paid at the end)?
- Can I fix the interest rate?
- How often do you require information from me to monitor the loan? What information?
- What sort of covenants would you stipulate? What are they? Interest cover?
- Can I repay the loan early without penalty?
- Is a charge over my business assets sufficient security?
- Do you ask for a Directors personal guarantee?
- Do you ask for security over my house?
- Will you utilise any of the Government Small Company Loan Guarantee Schemes to offset some of your risk?
- I have been banking with you for X years? Why can’t you offer me a better loan structure with less guarantees from me?
- What can YOU do internally to reduce the number of strings attached to any financing?