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Businesses
are being advised not to take refusals of help with funding from
banks as the final word on the matter.
The
Institute of Chartered Accountants in England and Wales (ICAEW) has
said that, if funding requests fail, businesses should be prepared
to challenge the decision.
Clive
Lewis, small and medium sized business expert at the ICAEW, urged
firms to be persistent: “If you don’t think the person you are
dealing with understands your business or the particular problem you
have, try to talk to someone higher up.”
Mr
Lewis continued that the banks appear to be willing to lend to what
they see as viable enterprises.
“In
their terms this means having a strong, well-balanced management
team; firm financial controls and accurate forecasting; a good
product or service; a plan for recession and a sensible capital
structure,” he explained.
Mr
Lewis also emphasised the importance of credit ratings: “When
turnover is falling, profits are falling and asset values are
dropping, credit ratings go down. Banks have to put more capital
aside to cover the risk of default for a business with a lower
credit rating.”
For
this reason, wherever possible firms should aim for good day-to-day
control over cash flow, tighten their credit controls and avoid bad
debts.
Mr
Lewis added that businesses seeking finance from their banks should
ask about the government-backed Enterprise Finance Guarantee scheme. |
