Being Bank Fit:

Would you be interested new or improved loan terms for your business from your bank? If so it is a great time to get bank fit and demonstrate this financial health to the banks! What do banks examine closely when assessing loan applications from small businesses? What do I need to do to maximise my chances of getting better terms? Read on to get some top tips on building another platform to your continuing success.

Improving your business discipline 

Banks are critical capital partners in many businesses across the country. However with the credit cycle still playing out its role as the guardians of this capital, it can a difficult time to extract improved or new business lending terms from your bank.  In this operating environment more importance is being placed on rewarding firms that have strong business discipline and who are investment ready. Building up business readiness though can take time but the journey needs to start with the first step by reviewing your existing performance in this area, and renew your targets and strategies. Building better business discipline is crucial to your vision of higher profitability, increased equity, capture expansion opportunities and better terms from your lenders to achieve your goals.

Preparation: The Famous Five

  1. Governance and Credit Performance – Banks need to see you have a robust management structure within your company and that your tax affairs are up to date and financial control disciplines are in place.  Your historic credit performance will be closely measured – never jeopardise this. Have a strong handle on Governance within your firm and be prepared to show it.
  2. Reporting – Banks need proper and regular financial control and reporting, which is transparent, timely, relevant and accurate. They also need to see evidence of regular financial reviews of performance management and the business has a strong grasp of working capital needs.
  3. Business Plan and Strategies – Banks like to see evidence of target setting within firms and a robust business plan, budget and strategy. Know your key strengths and plan expansion around them. Be prepared to show evidence of previous successful executions of innovative strategies, and show data of actual and forecast performance and the meeting of targets. Also prepare a risk strategy which outlines key risks to your business, a risk mitigation plan, and a plan to deal with risks being triggered. Some sensitivity analysis around how your business would react to a 20% fall in sales or a 15% cost blow-out will signal to banks you are a serious player.
  4. Depth of Management.  Know where your key managerial strengths and disciplines lie and where the management gaps are.  Be prepared to outsource the skill sets that are in short supply and place contingencies around sudden disruptions to management.  Succession planning and key man risk are both areas of consideration.Putting skin in the game: Equity & Cash Flow –   Banks are not risk takers, you are.  So be prepared to put in sufficient equity and capture adequate cash flow alongside any bank investment into your plans. This is a gate opener.


Being investment ready will place your firm in a strong position to go to banks with a stronger case for better or new lending terms. Use the list above to ready yourself for renewed periods of growth.  Ignore the famous five at your own peril.

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