smallbusiness.co.uk: Helping your business think big

Our survey over the past fortnight shows that the majority of you are displeased with the charges levied by your bank and are either reclaiming or thinking of reclaiming them, with 24 per cent having already done so successfully.

Business banking and bank funding are hot topics for small business owners and managers. Many growing businesses fail to secure bank funding as they think they lack adequate collateral. While banks are less risk averse than they were, the way that you approach them can make all the difference.

Relationships are all-important in banking, so you need to make sure you are talking to the right person. For example, if you are a small franchise, find the franchise expert, as someone who is inexperienced in your field may not understand the market well enough to appreciate your approach.

You might also want to introduce yourself and your business before asking for money. Show them what your are doing and how you are doing it, so that when you go back and ask for a banking facility, it’s not the first time they’ve met you.

For smaller businesses, bank finance on reasonable terms may not be immediately forthcoming. Banks want to know that you can deliver, so you may need to build credibility with your banker.

They don’t want to hear fluffy sales speak, they want you to be realistic about your risks. If they hear you claiming that there are no downsides or no competitors in your market, they are likely to dismiss you out of hand.

If you negotiate shrewdly and appear realistic and well informed, you may be able to achieve more favourable terms. You could try for a deal that lowers the cost of borrowing as your business performance improves, based on profits. That will de-risk the business as it grows and take the pressure off as you begin to find your feet.

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