Access to finance remains a major concern
Mon, 1 December 2008 AEST
Email
PrintFrank Sirianni
Arising from the US sub-prime crisis, the lending policies of all banks have become tighter. However, each bank's approach to lending varies across the banks. Many have a 'watch' position. Others are positive and looking to building their book. The flight to quality and risk pricing has been adopted by all.
The banks have become selective in the deals they will fund. Information requirements are strictly adhered to, onerous reporting requirements are being set, and cash flow / serviceability are critical to obtaining finance.
Now, more than ever, you need to focus on building your relationship with your banker. Speak to any banker and inevitably they bring up the "relationship" word.
It is ironic given that the lack of understanding of their client and adequate credit controls that has placed us all in this mess!
After speaking of their desire to build a relationship, most will deny that they are cutting back on business lending. Their aim is to "provide the customer service and build a 'quality' book". However, in the midst of this crisis they are using this as an opportunity to 'reprice' risk and increase margins (the price the banks charge for lending money).
5 steps to business success!
While building your relationship with your banker is now more critical than ever.. the real key to success is your relationship with your customer.
However to build a relationship with your banks follow the following steps:
- Meet your bank manager
- Tell them about your business and what's happening
- Keep them in the loop - good and bad news
- Ask them what they do and how you can help them
- Work to a plan and always deliver
Many business people have problems with banks but one of the main reasons for this is the lack of understanding between you and your bank.
This will involve establishing a relationship with your banker and building trust. Bank and bankers generally lend money to people they trust. In these times, this trust is more critical than ever.
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If you wish to discuss business or commercial finance arrangements, please contact Medici Capital.
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