Banking Support

Very few of us have the wherewithal to finance our new business activities from our existing funds and so this is where the finance providers come in. If you are going to a bank for a loan or just a business account you will need to be prepared.

All the major clearing banks are represented on the Island. If you do not need finance for your venture the requirements are fairly minimal. The bank will need to know in outline what your business plan is. How much sales turnover is likely to pass through the business current account. There will also be the requirement to complete the bank’s account opening documentation and provide proof of your identity (passport) and verification of your address (utility bill or driving license).

If you are looking for an overdraft facility or finance for business start-up costs the bank will require more information.

Most banks will offer an initial period of business account operation free of activity charges.

It is easy to underestimate how much money is required to get your business up and running. No bank wants you to have a bigger loan than you need, but not having enough finance is one of the most common problems in small business, and can be the cause of early failure.

You will need to build a business plan to help you gather your thoughts on the likely level of finance you will require to establish your business. Carefully filling in your cash-flow forecast is the best way of determining whether or not you will require an overdraft facility.

The bank will discuss with you the assumptions you have made in determining how much you need to borrow. Questions to consider include:

• What are my set up costs?
• What equipment do I need?
• How much of my own money do I have available to finance the set up costs?
• What credit terms will I offer my customers?
• What credit terms are on offer from my suppliers?

If you are buying an existing business you should consult your accountant to check out the level of the asking price.

Unless you can attract an investor to put up capital you will, like most people, seek finance from a bank. In the current credit situation, most lenders will expect you to contribute personal funds (capital) towards the establishment costs. They will then consider financing the balance required. Remember, Banks are in the business of lending money so they will be looking to try and assist where possible.

Below is a check list of information that the bank will require to help them reach a decision:

• Business plan incorporating - market research, premises location, client base, equipment needed, staffing, your analysis of the competition in your chosen business sector, and your finance requirements.
• A Cash-flow Forecast.
• Personal bank statements for at least six months.
• A schedule of set-up costs.
• Details of your financial contribution.
• Details of your personal assets and liabilities ie. value of house and mortgage and other personal financial commitments.
• Details of business assets.
• If you buying an existing business you will need 3 years accounts and 12 months business bank account statements.
• Curriculum Vitae - for you and any business partners.