First impressions matter.
It is important for SMEs to make the best possible case when applying for credit from financial institutions. Banks assess each business application on a case-by-case basis, on their own merits, and make decisions to approve the finance based on the banks credit risk policies and appetite.
Primarily, banks are concerned with Cash. Can your business generate enough cash to repay any proposed loan over the period requested? Do not approach your Bank without being able to answer ‘Yes’ to this question.
Fail to Prepare – Prepare to Fail!
The key is having up-to-date Financial Accounts (management and independently verified) showing where your business is coming from; and credible Cashflow Projections to show its likely future – and that the cash will be there to make the repayments. Ideally this information is captured in a Business Plan. Micro and Small businesses can get useful guidance from the Local Enterprise Offices on developing their Business Plan, and all businesses can use templates from Bank websites. Other information required can include listings of the Debtors and Creditors, and a tax clearance certificate from Revenue. You may also need to provide details on any security that can be offered.
Get Agreements in Writing
If you are successfully approved a facility, or restructure/change your current arrangements, be sure to capture and record the details from your Bank in writing – you might need to rely on this documentation in the future.
Maintain a good track record – both with the bank and other credit providers.
When you have successfully obtained a loan from your Bank be sure to keep to all the terms and conditions, maintaining a good relationship so that any further requests for credit will be viewed favourably. These are requirements the Banks set for each Borrower, however we find that borrowers are not always aware of the details e.g. If you have obtained an overdraft from your Bank, it will expect the account to return to credit for some part of the year (typically 30 days across the year). It is very easy for the bank to check if you have operated your facilities to terms – and any blemishes can be considered a sign of distress in a business, impacting on future access to debt.
In addition, lenders in Ireland must ask for a credit report from the Central Credit Register if the borrower applies for a loan of €2,000 or more. Your credit record is a factual report which includes the type of loan, the amount of the loan, the amount left to be repaid and any missed or outstanding repayments. All lenders must submit credit information on credit facilities of €500 or more. The credit record is one of a number of factors considered when banks are assessing any applications for credit. We strongly recommend that all borrowers check their credit record before applying for credit.
What if I am having difficulty securing credit from my bank?
Credit Review is here to help. We provide an independent appeal service for businesses who have had credit facilities refused, reduced, restructured/refinanced or withdrawn by AIB,
BOI and PTSB for amounts up to €3m.
We also operate a helpline – sometimes credit issues can be resolved without a formal appeal; something that is appreciated by both banks and borrowers! Our appeals process is flexible and responsive. Our credit experts will engage directly with you and provide comprehensive insights into the credit application/decline process.
For more information on our independent appeals process and information services, visit creditreview.ie to request a call back, or call the helpline directly on 0818 211789
