Loans awarded to small businesses are being slashed according to figures released on the 12th August 2010.
Despite banks such as RBS and Lloyds recording monster profits, they are being accused of not supporting Britain’s 4.5 million small businesses. New lending to this sector has fallen from an average of £991million a month in 2008 to £564million in 2010 – down 43per cent according figures published in the Daily Mail.
But there are ways in which small businesses in and around Romford, Dagenham and Barking might be able to secure a business loan from prudent banks. Presenting themselves as a reputable business that is on a sound financial and business ground will go a long way to securing the funding required. But what are banks looking for in a business in order to award finance?
Solid Customer Base
If your customers are themselves good, reliable businesses then the banks will feel secure in knowing that they will be unlikely to default in payments to you, and in turn you will not default on repaying them. It is well worth investigating a good bookkeeping service who can keep a detailed record of all your customers and the dealings you do with them to present to your bank.
A Well Presented Business Plan
With the help of a local bookkeeping service, create an easy to read, straightforward business plan that lays out exactly where the business is, where it is going and how it can get there. This will make the business look professional and will show the lenders the sound financial position of the business.
Approach the Banks in a Strong Position
It is important to plan ahead in business. Remember that banks are risk averse and are much more likely to lend with the business in a strong position rather than one acting out of desperation. Banks will be happy to lend, in theory, to businesses that are showing growth or a potential for growth.
If these three rules are followed, the chances of banks lending to your business should be increased. All of this can be achieved, especially with the help of a qualified bookkeeper who will be able to provide quality management accounts so that you and in turn the lender will know exactly where your business is and where it could go financially.
With banks being prudent during this economic downturn, make sure your business ticks the essential criteria boxes for which the banks will be looking.