How to approach the bank for business finance

Published on Business stage: Scaling, Starting

Natalie Hughes, NatWest’s business growth enabler for Liverpool, Southport and Wirral, provides some tips on how to approach your bank for finance.

Whether you’ve recently started your business or you’ve been going for a while and are growing, you might be wondering how to approach your bank for some borrowing. There are a variety of options for you to consider, from a small business loan to an overdraft, to asset finance or invoice finance.

Your bank will be happy to help you to consider all the options – but first you need to think about:

  • How much will you need and what for?
  • When will you need it?
  • How much in savings/cash can you invest?
  • Can you get help from friends and family?

Armed with the answers, you can make your case to your bank. Their considerations when assessing your loan application will include how much you are able to contribute. You will typically be expected to put in 50%, which demonstrates your commitment and confidence in the business.

You’ll be asked if you can raise money from other sources and whether you have a contingency plan. Expect to talk about your strengths and weaknesses, what and who is in your support network, and your credit history.

Your bank will want to see your business plan, which should outline your mission, clearly identify your goals and spell out how you intend to achieve them. It should include:

  • Business background
  • Analysis of competition
  • Routes to market
  • Advertising and marketing plan
  • Your professional background
  • Breakdown of costs
  • SWOT analysis (Strengths, Weaknesses, Opportunities and Threats)

You’ll need cash in your business to cover wages, drawings and dividends; rent, rates and utilities; loan repayments; VAT and tax; and purchases and supplier costs. Calculating cash-flow makes sure the cash in your bank account matches the daily cash needs of your business. A forecast will help you look ahead to identify potential cash flow issues.

Send out invoices promptly and accurately and be quick to chase overdue bills. Consider all funding options rather than purchasing an asset with cash – for example hire purchase or leasing. And don’t have too much cash tied up in stock.

Finally, remember that there are other sources of funding including business angels, crowdfunding, venture capital and individual investors.

To find out more about NatWest’s business growth services, contact natalie.hughes@natwest.com or visit: business.natwest.com

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