Bank Refuses to Fund You Business - Here's Why

One of the biggest gripes I consistently hear from businesses is “the banks just won't lend money any more, they are no help at all”!

But they are very helpful when they have the facts.

You spend hours, days perfecting a 9-slide pitch deck to attract money from equity investors, you have a sales plan to get the money you need from investors but when it comes to the bank you believe you can just call the bank and ask money. And then wonder why they say no!

There are two important things to get in place before approaching the bank or any other lender?

1. Get the best bank manager you can, and
2. Tell the story

Get the Best Bank Manager

Are you dealing with the right department? All the major High Street banks (which most businesses use) generally have a three tiered offer for businesses. In general it look something like this although each bank is different.

• Start-up to £500K you're on your own or you may have a bot to help you.
• £500K to £5M you fall into the business banking category. Here you most likely have a relationship manager.
• It's in the £5M to £25M bracket that you find Commercial banking.
• Corporate banking is anything above say, £25M

The key to your success is to be in the band above your last annual revenue figure. You need a bank manager to pull you up into that category, not hold you down.

So, if you have a turnover of £3M but have a plan to get to £15M then get yourself into the commercial banking team now, not when you’ve struggled to get your turnover to £6M. Get all the benefits of working with an expert, experienced bank manager who helps, who is proactive, who gets where you're going, why, and how you'll get there. Everyone wins.

Don't settle for status quo. Find a bank manager who can push you, help guide and celebrate when you get there.

Remember, Don't Ask, Don't Get. This blog written in 2014 is still valid today

But, and this brings me to point 2, you have to be able to tell the story.

Tell The Story, The Whole Story

Bank managers are pretty useless at guessing what you're doing, why and how. They don't know the end goal, the potential vision, the money you’re going to turnover. They know nothing about the business they don't understand it so why should they lend you anything?

So why not a nine slide pitch deck for the bank? And your accountant too. Tell them your story, how it started, what you've achieved so far, the goals, the challenges, the obstacles, the opportunities. Tell them everything, skeletons included.

Take time to prepare your pitch, think about all the questions the bank will want to ask and prepare those answers now. What questions would you ask, if you were lending you, £550K? Bring up the questions, understand their point of view what they need to ask. Make it very easy for the bank to understand you, the business and what's in it for them. Imagine you were in the mafia and wanting to do a deal you would start your pitch with, I'm going to make you an offer you can't refuse. That's your job.

There is a fantastic book called Your Next Five Moves by Patrick Bet David to help you go deeper into making an offer they cant refuse.

Another book is The Investable Entrepreneur by James Church. There is an opportunity to get a free copy.

The key to a brilliant, mutually profitable banking relationship is to get a bank manager that ‘get’s you’ and your company. A better one than you need today, one who will pull you up. Work in partnership, that means no secrets, nor surprises – banks hate those! Plan in detail, plan early, monitor progress and raise issues & challenges as early as you can. Head in the sand and leaving things to the last minute, keeping secrets is a banking disaster just waiting to happen.

Time spent working on the story and finding a better bank manager will be the difference between surviving and thriving. Make them part of your advisory board alongside your accountant. I promise it will be one of the best things you can do.

And finally, make it your job to keep in touch with your bank manager rather than waiting for them to contact you.