Top tips for SMEs when approaching a bank for finance
Tuesday, October 1, 2019
Headline sponsors NatWest offer five top tips for SMEs when approaching a bank for finance.
- Your bank will be happy to help you consider all the options, but it’s always useful to think about what you want from the bank ahead of the meeting. Think about: how much you will need and what for; when will you need it; how much in savings/cash you can invest in your business and whether you can get help from friends or family. Practice your pitch for funding ahead of your meeting so you can work through any issues ahead of time.
- Your bank will want to see your business plan, which should outline your mission, clearly identify your goals and spell out how you intend to achieve them. Make sure your plan is up to date. Know your numbers to ensure your banker has what s/he needs to find the right funding solutions for your business.
- Be able to present a cashflow forecast. Calculating cashflow makes sure the cash in your bank account matches the daily cash needs of your business. By being organised with your projections, you can better mitigate against issues that may arise. Make sure you manage stock and inventory effectively as part of this process.
- Consider all funding options rather than purchasing an asset with cash, for example hire purchase or leasing. And don’t have too much cash tied up in stock. Make sure you have a contingency plan you can discuss with your bank.
- Remember that there are other sources of funding outside of traditional banking including business angels, crowd funding, venture capital, and individual investors. There are also government tax credits designed to incentivise companies to invest in research and design, and these can be for businesses in any sector. Make sure you have links with a good accountant who can advise on managing books and help you make the most of your money.
For more information on how NatWest can support you and your business, visit: https://www.business.natwest.com/business/business-banking/business-matters/run.html