Chamber of Commerce: Increased focus on lending is good for businessBy Laura Herbert
February 22, 2013
Wokingham Chamber of Commerce is your local business support organisation.
As well as regular business events and influencing key changes in the borough likely to impact on business, each month it will feature a topical business issue here.
This month Chamber vice-president ROBIN ASHTON, a commercial manager at HSBC, focuses on access to finance for small and medium-sized businesses.
THE good news for businesses is an increased focus on lending.
While uncertainty about the economic climate is putting increasing numbers of businesses off applying, banks really do have funds to lend to firms with a viable plan, a good track record and an existing relationship with their bank.
This is a result of the Government ‘Funding for Lending’ scheme, which lends banks and building societies funds at the Bank of England’s Base Rate (0.5 per cent).
This allows for these institutions to discount the product range, rates and criteria and ultimately increases their appetite to lend.
HSBC is committed to lending to businesses. When HSBC assesses an application for a loan, they look at a range of factors to determine whether it will be successful.
Applicants need to show a good understanding of their business, their market and demonstrate their ability to manage the business and generate profits.
This can best be presented in a business plan.
For new businesses, information about you, your business proposal and personal and business assets will demonstrate your skills and commitment to achieving your plans.
For established businesses, historical accounts and up-to-date management figures will evidence past financial performance and lend credence to projections of future performance.
A detailed explanation of the purpose and amount of the loan allows a lender to discuss finance options to determine if it is appropriate and to structure your borrowing in a suitable way.
As a responsible lender we need to understand how you intend to repay the loan and be confident of your ability to do so. This will normally be set out in a business plan, including cash flow forecasts.
For established businesses we will assess the historical trading figures and current turnover, as well as plans and projections. Business interests and experience of the business’s management team are also important, as they show the company’s expertise and focus.
But the most important factor is the cash flow forecast within the business plan, showing the potential profitability and ability to service any debt.
A good business plan demonstrates you think logically about your business strategy and business model. Templates for business plans are available on the HSBC website and also from other lenders. If your application is declined, lenders will explain their reasons and they will have an appeals procedure.
n For more information about Wokingham Chamber of Commerce visit www.wokinghamchamber.tvchamber.co.uk.