What to do when the bank says no
Despite talk of renewed confidence for businesses in 2013, many in the fashion world have been turned down for a loan or overdraft. But what can you do if the bank says no?
- The first question to ask yourself is am I clear about what my business actually needs. Is it funding for growth in which case a loan may be appropriate or is it ongoing working capital finance to support the expanding business?
- If it is a loan then don’t give up. The banks make their money by lending so if you are a viable business with a sound business plan you are still in with a chance. All too often business owners rush the planning or don’t present the right figures/forecasts to the bank manager.So it’s worth getting proper advice, preparing the plan and giving it a go with another bank. If at first you don’t succeed…
- If the banks say no then you may have to look to alternative sources such as friends and family, a business angel or perhaps one of the crowdfunding platforms.
- If it is working capital finance then a loan or overdraft may not be appropriate as this could be only a short term fix. You must consider alternative forms of working capital finance such as asset based lending (ABL) which may come in the form of an Invoice Discounting or Factoring facility. No longer seen as the lender of last resort or for struggling companies this really is one of the best ways of funding a growing business.
- You may also want to look at innovative providers such as Market Invoice. This online marketplace allows companies to selectively auction their invoices to a network of high-net worth and institutional buyers. This may well help to deal with peaks in your cash requirements without the need for a full ABL facility.
Bobby Lane is a partner at Accountants and Business Advisors firm Shelley Stock Hutter LLP. He advises many fashion and creative businesses on all aspects of their business