It is well documented that traditional banks aren’t willing or able to provide enough finance for SMEs as the aftershocks of the financial crisis still work their way through the system.
Unfortunately too many businesses simply give up looking for finance if their bank says ‘No’ as they don’t have the time, energy or knowledge to look elsewhere.
It is also surprising that many small businesses don’t even approach the traditional banks as they perceive the answer will be ‘No’ and just give up looking for finance.
One of the first questions Just Cash Flow PLC asks a prospective customer is; have they approached their bank as this, in many cases, will be the best option for them. However, it is clear that alternative lenders provide a much faster solution and are well positioned to serve and understand small businesses.
I believe two things are urgently needed. Firstly, alternative funding providers should work harder to ensure that businesses are more aware of the different finance options that are available. To help address this we have a number of educational/guidance videos that can be found on our website
“WageRoller provided us with exactly the type of flexible finance solution our business needs.”
This business is an excellent example of one that has embraced alternative lending and was well prepared when they first approached us. However, this isn’t always the case and businesses can do a lot to improve their chance of having their finance application approved.
Television programmes such as Dragons’ Den help highlight the fact there is no shortage of good ideas. However, businesses applying for credit could learn a lot from the line of questioning the Dragons adopt and the reason why the common response is “I’m out”.
Where is the business plan? Who looks after the finance? What are the business KPIs? Just Cashflow is looking for the same information and it really increases the chance of getting finance if the business has the answers and can demonstrate it is being proactive and in control.
Naturally, how the business is going to be financed and how the all-important cash flow is going to be managed are key questions businesses should address. Unfortunately, we come across examples of Directors who enjoy their title but obviously have a very poor grasp of business fundamentals.
Businesses should focus on doing everything they can to improve their creditworthiness. Some directors we have encountered focus purely on the company and forget that almost all prospective lenders will also run a personal credit check. Therefore, directors paying their own credit cards, utility bills etc. and showing they are in control of their own finances is extremely important. Filing business accounts within the deadline, paying suppliers on time, having a Debtor Book and a system in place for ranking and following up late payers all contribute to building up a very positive picture of a well-run business.
Being proactive and demonstrating the above doesn’t guarantee you success but believe me it does significantly improve your chances.
Just Cashflow is in the business of helping businesses improve their creditworthiness. In the future, if one of our customers approaches a traditional bank for finance we will be only too happy to assist. A record of drawing down on one of our finance facilities, meeting regular interest payments and repaying in full means we will be only too happy to provide an excellent credit reference.
Article supplied by: Just Cashflow