Sunday, 17 December 2017

Information and commentary for the small business banking industry

How banks can help customers apply for business loans

25 May

Business loans – sooner or later, most customers will need one

As a bank, you’ll understand better than anyone that bank financing is essential for most small businesses, whether they’re just starting out or looking to expand and grow their business. There are few businesses that can launch or grow without bank financing, so to give them the best chance of succeeding in their application, there are easy ways to guide them through the process.

Of course, all banks have different criteria that’s relevant to the individual bank, but there are things almost all banks have in common when they’re considering a business loan application. It can only boost your relationship with your business customers if you’re able to give them a guide or checklist so they can maximize their chances of their application being approved.

What do they need to borrow?

Businesses will be looking to borrow as little as possible, but enough so that they won’t have to come back to you any time soon. So it’s important to explain to them they should factor in a small buffer now that they might not need right now, but it’s better than having to return to you at a later date and admit their initial estimate was wrong.

So sit down with them and outline all the details they’ll need to provide around what the money’s for – stock, equipment, set-up costs, working capital etc.

Preparing their application

What you’re looking to do is underline the importance of being prepared and of having all pertinent information at their fingertips. So if you’re offering them a checklist of things to cover, you should include:

  • How much they’ll need to borrow and what the money is for.
  • What they’ll use to secure the loan.
  • How much of their own money they’re planning to use for start-up or growth.
  • What other debts they have.
  • How they plan to service the loan repayments.
  • Provide a business plan and a cash flow forecast template they can use. TSBC can supply licensed or custom templates if you don’t have your own.
  • Details on how they run their business, such as the management and operational structures, and their legal and accountancy advisors.

In the end, you’re looking to get across to them that banks like to know as much as possible about a business and who runs it before agreeing to lend them money. So it’s important to explain the concept of a good and bad risk, and an outline of how you as a lender determine those risks.

What it all boils down to is good preparation. And the more you can help them with that, the better your relationship with your business customers will be. You’re also getting a good idea of how organized and diligent your customers are, so it’s a win-win situation for both of you.

Here at TSBC, we can offer you great content around helping your small business customers to increase their chances of success when applying for loans. Contact us on sales@tsbc.com to find out how we can help you.


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Glen Senior
Glen is the founder and CEO of The Small Business Company, a New Zealand based agency that specialises in helping banks communicate with small businesses through content marketing. He has written a number of books on small business principles and is a sought after consultant and conference presenter.

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