3 Questions You Must Ask Your Bank Manager
Back in the early 2000’s the UK business banks went old school. They started to give their front line managers more authority and an ability to make local decisions. This approach was a step back to old fashioned banking and one that was largely welcomed by their clients.
From the late 2000’s the UK banks changed tact, local authorities were reduced and the decision making process was centralised. This change was driven by a want to control lending and by regulation of lending decisions.
What this meant was that businesses struggled to raise finance through their bank because the game had changed and nobody had really explained what that meant for the business client.
Today, businesses still don’t fully understand what is going on with their bank, so here are 3 key questions you need to be asking your bank manager.
1 – Who Makes The Decisions?
It is more than likely that your bank manager is merely the middleman between you and the bank credit underwriter. This means that the person you are talking to does not actually have the final say.
It is important to know the answer to this question as it shapes what information you need to supply to make sure your bank manager is summarising and supporting your lending application the best way they can. It is like Chinese whispers, if the message gets slightly changed at the outset then by the time it gets to the end of the chain the whole thing is completely different.
No great surprise therefore that so many business loan applications get declined.
2 – Can I See What You Have Put About Me?
This one refers to the report your bank manager will put together to summarise your lending application, the risks to the bank and what they are recommending the bank sanction.
Normally the response to this question is related to data protection. The most common bank response is ‘this information is not made public’ or ‘I cannot give you that detail’. In reality data protection rights mean you can access these reports as they are written about your business and relate directly to your business.
If you can access these reports then don’t judge what is in there. The bank will always see things differently to you. The important thing is to make sure your bank manager has understood your business and has properly ‘sold it’ to the ultimate decision maker.
3 – What Is Your Policy On My Business Sector?
Banks have policies on various business sectors. These determine how much they will lend, what base level of experience is required and whether they even want business in that sector.
Too often your bank manager will not want to tell you the policy. After all, they don’t want to lose a client and probably want to try and help you. Banks will also not have a blanket ‘no’ on sectors as they will always want the very best businesses to bank with them. What this does is mislead your bank manager into thinking a deal is possible when it may well not be the case.
Ask about the policy, you will then know exactly where you stand and what is or is not going to be possible.
By Dave Farmer