All businesses are finding it hard manage cash flow in the current economic environment. Even harder is trying to raise finance for a new business venture, for working capital or for expansion. Media reports seem to indicate that bank lending to small business is particularly difficult.
Let’s assume you do get a hearing with your local bank manager. You’d probably plan on being bombarded with questions and maybe even grovel to get the money your business needs. Why not turn this on it’s head? Why not approach a bank with a list of questions to ask? The first question would be “is your bank suited to my business needs?”. A simple question, but some banks just don’t deal with small business or particular sectors (even in good times). Christine Lagorio (Inc magazine) writes eight more questions like this (9 Questions to Ask a Small Business Lender) with the help of Bob Seiwert, a senior figure in the American Bankers Association. The questions are (click the link above to read the answers):
Does the bank have any questions about your character?
Does the bank understand your reason for borrowing?
Is the amount you’re asking for reasonable?
What’s your cash position?
What are the risks to loan repayment?
Can these risks be mitigated without adding tough terms to your loan?
Do you think my company’s financials are strong?
Do you trust me?
Read the full piece, it’s really good advice.