If you went into your local butchers and he said “I am open for business and have meat for sale” you would probably leave.
Dig a little deeper and what the banks are actually saying is we are open for business and have money to lend on our terms. They should have been saying that years ago. Now the banks want three things security, sound management and a history of business performance.
The days of credit committees nodding through recommendations from the bank or relationship manager are gone. So if you need to visit the bank manager to borrow money what do you need to do? Turning up with an out of date budget just wont do any more. Any request for finance is going to met by tough questions that will need sound answers.
My advice is don’t approach the bank until; you have spoken to your accountant; you have clearly defined what your borrowing requirements are for; you have up to date accounts; you can produce accounts for the last three years (if you’ve been trading that long) and you have a forecast cash flow and profit and loss for the next 3 years.
Finally you need to so some sensitivity analysis: if Z doesn’t happen what will happen to X etc, everything should be checked and there should be no mistakes in spreadsheet formulae.
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