20 Oct 10 Bank Finance Needed to Support Your Business – 11 Points to Consider
Most requests for bank finance are turned down not because clients are a poor credit risk but because they have approached their bank ill-prepared. Get ahead by communicating the right information the first time.
CASHFLOW Provide data that shows you understand and can manage your working capital (debtors, creditors and stock) and that the cash in your business is sufficient to cover the bank’s interest (as well as other key costs such as tax, dividends and replacement capital). “Cash is king” and even profitable businesses can fail if cash is not managed. Understand your cash movements and you may even need to borrow less.
OUTLOOK Present forecasts which communicate the amount required, payback period, risk and return to the bank. Figures should be more sophisticated than forecast sales and profit and should ideally show the relationship between profits, your balance sheet and cash flows. Sensitivity analysis is important to help the bank understand when they risk non-repayment. Forecasts should always be based upon the most up to date actual data.
MARKETS Explain your market. Focus 20% of your efforts explaining what has happened and 80% on what you expect to happen and why. Do not worry, top economists sometimes get this wrong too. The point is you need to show the bank you have thought about it, considered the likely outcomes and that you have a clear action plan.
MIX AND QUALITY OF CLIENTS Detail clients by name/industry/region/contract length. The strength of your clients and their ability to pay = the strength of your business. Building your business around one client is high business risk.
UPDATE Give the bank up to date management information especially if annual accounts are dated. Information should be produced at least quarterly, split into division/region and include profit, balance sheet and cash flow breakdowns. Management information should be used to update forecast/budget data and any differences should be explained.
NEED FOR LIQUIDITY Show the bank that your business is liquid and can survive. Tell them how quickly you get your hands on the cash and know your debt maturities, credit terms and what cash is tied up in assets. Think beyond a simple current assets/current liabilities ratio and consider your ideal liquidity position. Remember too much liquidity means assets could be generating a higher return elsewhere.
INCOME Know your financial definitions. Are you talking about gross profit, operating profit, net profit or EBITDA (earnings before interest tax, depreciation and amortisation)? All are common in the financial analysis of businesses. Also ensure you can discuss the seasonality and cyclicality of your industry.
COMPETITION Tell the bank how you have you performed in comparison to your competitors? Be prepared to discuss your competitors’ strengths and weaknesses. This provides confidence that you are a proactive management team that really understand the business.
ACTIVITIES Break your business down by activity/division and tell the bank which activities are performing well and which are a cash drain and why. Explain how divisions complement or overlap each other and the strategy for each. Be ready with forecasts if necessary.
16 Mar 10 Property developer should seriously consider Finance
If you want to develop residential or commercial property by way of expansion or a building, then give some thought to removing Bauträgerfinanzierung. Funding for the developers do not have a interest rate as a residential mortgage. Instead of the price you pay will depend on factors such as the amount of experience they have in development, the size of the project that is proposed and the type of project you are takingon.
There are many advantages to the Council and the help of a specialist. Of course you are free to advise and offer a wealth of information on all aspects of real estate development. Along with this one broker, you can only access the information you give is the base, and then find the cheapest rate with the best offer. A specialist has access to a provider that are not able to have a team with one compatible with a custom your baseCircumstances.
When it comes to interest rates can vary considerably and usually between 1.5% and 2.5%. Of course, these various factors will be affected. The size and nature of the project is how the nature of the project and the experience was developing real estate. All lenders also consider your credit rating if its rating is very good, which will offer the best rates can be. However, a bad credit rating means that you make a paymentto assess higher.
When it comes to choosing the deadline for finding a mortgage finance real estate development specialist can help you a loan usually lasts 1 to 25 years or more, depending on the size of the project. If you stop on the basis of a large project, whose cost could be much better here with an interest only mortgage. A guide only interest is more convenient when it comes to monthly repayments, but this is due to the fact thatonly the interest that has accumulated on the loan. This means that if the mortgage is paid and is still the ratio of capital in its entirety. Some lenders require that you demonstrate you have the resources before they lend money.
If you choose a repayment mortgage then the amount you pay each month will be more expensive. But at the end of the mortgage, is not a lump sum payment. This is because part of the monthly repaymentto cover the capital and part interest.
There is much to consider when it comes to funding the development of the property, but there is help and advice out there. The choice to go with a specialist not only to economize, but also an enormous amount of time. This is because a specialist who knows from experience, the lender best suited to your situation best. Will be at the center of their search for the best deal on these.
Related to : citizenscu.org www.bankmercantile.com www.Cashloannetwork.com
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