What’s happening out there?
We work with many business owners and talk to them about the availability of funding for their businesses – almost all tell us that if you are an SME it is still incredibly hard to access funding through the traditional channels (mainly banks).
This has a lot to do with those banks’ appetite for risk changing over the last few years – since 2008 really. And back then there were limitations on appetite for a number of well documented reasons including capital adequacy, risk appetite and general weakness of the UK economy.
Most bankers accept this; they now hold significant cash balances and are ready to lend – but they need to apply very strict criteria. Which means that only applications of the very highest quality will be successful.
In addition, the focus of a banker has changed. They used to be approachable with few targets – and, critically, with the authority to make lending decisions locally. Nowadays, in the main, they are considerably more stretched (overstretched even) and have very limited authority locally – almost everything now needs to be put before faceless and unaccountable professional credit committees.
It is that overstretched word that resonates with a lot of the bankers we speak to. They will notionally have considerable input into any lending application but quite simply do not have the time to rework an inferior application – so it really is up to you to take the lead and make sure your application is in the right format and addresses all possible questions.
So there will be winners and there will be losers
The winners will be those who are aware of and in control of their finances.
Winners will have invested time and thought resulting in a compelling and clearly articulated application for funding. They will have invested in the right resource – either internal or external – to anticipate all possible questions and to identify all possible risks. In short, someone with the authority to make it happen.
What it boils down to is this. If you have a credible plan with the right expertise in place to deliver it, you will be one of the winners.
And now for the losers – their application will not even get past first base (and if by some fluke they do, they will be sifted out pretty quickly by those unaccountable credit committees). Your local banker will probably not have the time or desire to rework it – so it gets nowhere.
Which one do you want to be – a winner or a loser?
But it does not have to be this way
At Tectona, we want our clients to be winners. Every time.
And get the right funding when they need it; and on the right terms.
Your banker will have a far easier job squeezing the application through all their lending hoops. And they will have far more confidence in your ability to actually deliver – for example, maintaining payments and complying with covenants.
With a great track record, the lender will also be pretty favourably disposed to any subsequent requests for additional funds or perhaps a variation in the terms.
The winners will very often benefit from the advice and sheer commerciality of a senior finance person – either a full time or part time FD, for example. Not only will they be in control but lenders really love the comfort of knowing things are being handled professionally – regular and timely MI, covenants complied with.
In short, if you can make sure that there are no surprises, you will be credible – big gold star!
All this is highly achievable – if you invest in the right senior finance person.
Wouldn’t it be great if you could find the right solution which ticks all these boxes:
- Value for money
- Smooth – no surprises
- Memorable – for the right reasons
How we can help you
The right finance person could be one of the team of 15 commercially savvy Tectona finance directors.
These are the differences between the two approaches. We have called them the “Do-it-yourself” Approach and the “Tectona Way”:
Your call …
For the first 5 business leaders that respond …
We are offering a free Tectona Ten™ healthcheck of your business finance function which gives you a report and action plan which gets you in poll position if you are looking for funding soon – for the detail Click Here.