Banks to get tough on finance
With the boom times seemingly over and the credit market generally tightening, it is prudent to prepare finance applications knowing the banks will be taking a tougher stance and lending only to the more blue chip borrower.
In the current economic climate successful finance applications should include:
- a detailed plan that will ensure the financier understands your business
- evidence of business success if the business is less than 5 years in operation
- the most up to date tax returns and tax assessments and tax returns from the previous 2 years as well as financial statements from the previous 3 years
- long term contracts with significant customers
Businesses should also enquire about alternative sources of finance such as debtor finance using receivables as security.
As local banks continue to increase interest rates and the overseas markets face a financial crisis, exacerbated by the sub-prime lending debacle it will be difficult for businesses to secure finance.
Contact your Chartered Accountant to find out how your business can be one of the successful applicants.
