SMALL firms in Kirklees should not take no for an answer on bank lending, said a local expert.
Nick Brook, of TaxAssist Accountants in Lockwood, spoke out after figures from the Federation of Small Business showed that the big banks are squeezing small firms’ credit further – with four in 10 small firms being refused credit.
The FSB found that confidence among small businesses has dipped in the second quarter, but that 50% of respondents still plan to grow their businesses over the coming 12 months.
Mr Brook said: “Sole traders and small companies in Kirklees are among the victims of the £1bn shortfall in bank lending to small businesses, but for many the door to vital funding to help secure future growth could be opened by following some simple ground rules.
“If they have a strong business case, they should not take no for an answer.
“It is often not what you ask for but how you ask for it that counts and banks must, of course, be confident they will be able to get their money back.
“There is a great deal that business owners can do to present a strong case and swing the lending decision in their favour.”
Mr Brook said: “Banks will expect to take some form of security and see at least 30% of your own cash injected into the proposal. If you do not have security available, enquire about the Enterprise Finance Guarantee Scheme.
“Show that the borrowing requested will be paid back and that it’s enough to run the business and fund the owner’s living costs.
“Work with your advisers to produce a clear business plan and cashflow forecast backed up by reliable evidence and a good track record.
“Never under or over borrow.
“Under borrowers could be forced to go back to the bank within a year, cap in hand. Over borrowers pay more in interest than they need to.
“Keep in touch with your bank and provide them with up to date information including good news and bad news.”