The Bank Doesn’t Understand My Business
Is this the most common line said about banks, especially in the last few years?
Probably is if our straw poll is anything to go by.
Why Don’t Banks Understand?
The easy answer here is that the small business and the bank have very different views and a different agenda. For the smaller business the difference is greater and that is where the disconnect happens.
A recent study sponsored by Kingston Smith showed the ‘lost in translation’ result of banks looking to secure lending books and businesses looking to expand and grow. Put simply the two things don’t mix well.
Why The Bank – Business Disconnect?
Well, banks expect a level of detail, conduct and consideration from small businesses. Small businesses have a degree of skill, time and focus to put on these things. What doesn’t happen is that the bank will tell you exactly what they want.
Put simply, they want options on saying no. They want to protect how they assess business lending requests. The fear is that if you disclose exactly what they are looking at then the small business will simply say the right things. This means the bank cannot properly assess and measure risk.
What this does is bring us full circle and it is this which generates the disconnect and lack of understanding.
What Can Be Done?
Well. Let us give you some steer here.
If you are applying for borrowing then try and cover as many bases as possible, That means looking at where your business risk is, then addressing them before the bank can see it as a risk.
We call it the ‘Chocolate Orange’. It is all about understanding the segments of your business and keeping as many of them together as possible.
To make things as easy as possible we have put all this into a 60 second video, so have a look and see what you think. Remember it is all about generating thought and giving you a steer.
For more detailed advice and information then please give us a call on 01293 541333, contact us here, or add your comments above.
By David Farmer