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Building “that” Banking Relationship

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Building “that” Banking Relationship. NOV. 2012. Choosing the right option: Debt v/s Equity. Debt or Equity what would be the best option?

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Building “that”

Banking Relationship

NOV. 2012

choosing the right option debt v s equity
Choosing the right option: Debt v/s Equity

Debt or Equity what would be the best option?

  • Deciding between equity financing or taking on a loan is a challenge all SME owners face. Should you go to a bank and apply for a business loan? Or should you look for an investor? 
building a sustainable relationship with banks
Building a sustainable relationship with banks

Key steps

  • Building a Business Case
      • Knowing your need
      • Understanding your business risk
      • Role of finance manager/auditor
      • Presenting your case
  • What can the bank do?
      • Advisory role
      • Simple and transparent process
      • Need based product delivery
role of finance manager auditor
Role of finance manager/auditor
  • Develop internal controls in the business.
  • Identify business challenges and potential opportunities for greater efficiency and results.
  • Identify potential financial risks eg. liquidity in the business.
  • Detailed analysis of financial data and its underlying reasons
  • Periodic Reporting to Banks.
how to present your case
How to present your case?
  • Assessing the suitability of bank capital as a source of funds for the business. 
  • Matching business needs of capital with different products and services of the banks.
  • Preparing an thorough application for bank finance.
  • Share a detailed utilization plan of the facilities requested
  • Have a mechanism regularly update the bank of material changes to the business
what do banks look for
What do banks look for ?
  • Banks are in the business of lending and risk sharing
  • Banks seek information which is quantifiable, verifiable and sustainable
  • Different banks based on their preference and internal know-how define and operate in target markets of their choice
  • Lending is based on a variety of factors which the bank seeks to asses
cause for concern
Cause for concern

Re a son

Absence of reliable information

Inadequate accounting & financial statements

High Risk Perception

Lack of proper feedback/references from market

Historical performance unavailable