Out With The Old And In With The New – Economy!

Shock and horror as the government announce the details of the €85 billion bail-out by the IMF & EU but is it all as bad as the media are making out? Do we need to draw down the full amount of the contingency fund? What does contingency mean? How many zeros make up a billion? All these questions and no answers…

ANYWAY, we’re getting off the main subject matter. The reason for this article is to do with business loans & business lending from the banks. There is a lot of press about new businesses not being able to get business funding for their projects and new business ideas and, from my viewpoint, this doesn’t seem correct. Why? Well, most of our new business clients didn’t have any problems obtaining business loans for their new business ideas. The reason for this is simple. There are a number of basic items you need when going to look for funding from the banks and number one on this list is your idea but equally important is number two – a business plan! To put it bluntly, I would not allow a new business to approach the banks without one. It is simply a waste of everybody’s time.

Two weeks ago I was at a seminar with the head of business lending from Bank of Ireland and he reinforced this new ethos of bank business lending hence the title – out with the old! The old system of informally asking your local bank manager for a business loan is gone. The bank managers do not have the freedom to approve business loans as they did before. An application must now be made, in writing! In addition to the written application you must produce a business plan, which consists of your business idea, business/company structure and financials. The financials will be of great interest to the credit department of bank lending as this will demonstrate the businesses ability to repay its debt.

In summary:

• Out with the Old: Casual, informal requests for funding are finished.
• In with the New: Written applications for business funding accompanied by a business plan with proper financials, i.e, Profit and Loss Forecast, Balance Sheet Forecast and most importantly, a Cash Flow Forecast.

If anybody has any questions on the above please feel free to contact me as we can supply all of your financial information and guidance.