Menu visibility control

Video

Events

Startup Surgery

Most Recent

Crowdfunding

Why are more and more tech firms turning to crowdfunding?

Tech City Voices

Startups must constantly evolve if they are to succeed

News

Top Tech Stats: Rising ransomware, praise over pay and much more

Press Releases

Zzish hits £1.15m funding target on Crowdcube for technology that will democratise quality education and move the needle on learning
Okappy announces the launch of its investment pitch on the AngelsDen equity crowdfunding platform
Recruitment disruptor talent.io poised for further growth with €8m investment secured

I’m going for a bank loan – what should I watch out for?

Dear Doctor, I am considering going to a bank for a loan – what are the things I should consider?

Juliet Rogan says...

twitterlinkedinFacebookgoogle_plustwitterlinkedinFacebookgoogle_plus

1. Understand the purpose of the debt facility that your business needs:

  • Is it for working capital or seasonal fluctuations?
  • Funding for an acquisition
  • Funding to invest in the growth of the business

2. Be able to demonstrate the repayment source for the required debt facility

  • In the case of working capital – the facility will fluctuate either monthly or throughout the year
  • Acquisition finance will be repaid by the cashflows from the consolidated entity, once the synergies have been exploited.
  • In reviewing growth finance (from a senior debt perspective – rather than venture debt) the business will have to demonstrate profit and cashflows from the core business that can service the interest and capital repayments of the loan facility.

3. Clear management information

  • As fast growth tech companies often have a limited trading history and get small company audit exemption it is important to ensure that management information is clear, accurate and up to date.
  • Be expected to provide a Profit and Loss account, Balance sheet and Cashflow for the last 12 months and be able to provide forecasts for the expected life of the financing facility

4. Share information

Share as much information around the strategy/ mgmt. team and investors as possible with your bank manager; they represent the  voice of your business through the bank and will be quizzed at all stages about your company, as such is it important to ensure that your representative is well equipped to argue your case.

5. Tenacity

In the event that you do not succeed with the request, be sure to get a clear understanding of the reasons why, you can also formally appeal a credit decision with the bank.

If you do get declined by your bank, speak to another bank, the worst they can do is say no and you may find they have a different approach or a sector aligned team that has a better understanding of your business.

Enter your email address to receive updates straight to your inbox

* indicates required
Send me news on...
twitterlinkedinFacebookgoogle_plustwitterlinkedinFacebookgoogle_plus

Editor's picks

Crowdfunding

Why are more and more tech firms turning to crowdfunding?
posted 3 hours ago

Charles Darwin

Startups must constantly evolve if they are to succeed
posted on May 28, 2017

Top tech stats

Top Tech Stats: Rising ransomware, praise over pay and much more
posted on May 27, 2017

Startup Weekly

Startup Weekly: IKEA Bootcamp, Nesta’s ShareLab Fund and much more
posted on May 26, 2017

Theresa May

Theresa May: Tech giants should be encouraged to do more to fight online extremism
posted on May 26, 2017

Alfa Financial completes ‘largest UK tech listing in almost two years’
posted on May 26, 2017