Banks are currently being run off their feet. They have set their number one priority to help their existing clients with the Business Finance Scheme and you need to go prepared. It is not a time to change banks.
They want clients to act sooner rather than later to discuss financing opportunities.
It’s not guaranteed you will get it
Some business owners are having to be educated that they are not guaranteed that they can get the government’s special assistance packages and it’s not free money. Interest will still accrue, and you will have to be able to pay it back within 3 years.
Some sectors will be out of favour e.g. accommodation, hospitality, retail property, property development and farming. Others are dreaming if they have had a record of poor account conduct with the bank e.g. repeatedly requiring overdraft extensions, poor records, breaching their banking covenants etc
How to get bank ready
Businesses are being asked to come prepared and involve your accountant or a business advisor. You will need:
- Up to date Financial Accounts
- Know your breakeven point
- 12 month cashflow projections to enable the bank to better understand the purpose of and how much funding you will need, and how long this will provide support for your business until you can return to a more normal trading situation.
- An updated Business Plan to reflect the above changes.
If you think your business is unsustainable, you are better to close it down sooner rather than later. No bank is willing to advance funds to a business if they think that to do so would be just postponing the inevitable. Banks are also wary of turnaround businesses and early stage businesses that are showing hockey-stick forecasts.
There are some factors which suggest the recovery back to our economy being as big as it was three months ago will be a slow one, according to economist, Tony Alexander. He suggests putting structures in place to handle lower average activity than before, then adjust to your particular surge when it comes along. “Plan to play catch-up rather than thinking some miracle has occurred and you’ve just been delivered an ability to forecast big changes in your customer flow which none of us had three months ago.”
Now is the time to make some tough decisions and act on some of the things you’d wish you had done earlier. It is also the time to use external advice. Qualifying SMEs should look COVID-19 Business Support services available through the Regional Business Partner Network.
If you need help to get bank ready, get in touch now.