In this final part of the series, you’ll discover how to conduct yourself when meeting the bank manager to discuss your application for your start-up business loan.
Read Part One: How To Apply For A Business Start-Up Loan
Read Part Two: How To Apply For A Business Start-Up Loan Part 2 – Tell Your Story
Prior to the meeting you would most likely have had some contact incorporating a discussion on what the bank requires in order for you to apply for finance. The next stage is when you write your business plan and send it to the bank.
It’s rare a bank manager will look at your plan and make a decision without meeting you.
Why?
They are undertaking a character check on you to ensure that you have the makings of a good business owner with the potential to be trusted with their money. A business plan does not allow them to understand you as a person, what drives you and where your passion lies.
Meeting Preparation
Your plan has been sent to the bank and a meeting has been booked. What should you be thinking about and doing?
1) Go over your business plan again and again so you know it intimately. Also, check your figures.
2) Ask a friend who is in business to go over your plan and figures. Is there anything missing? It is helpful if they ask you questions about the plan, your experience, your business background so that you feel comfortable answering these types of question.
3) Ensure you have all supporting evidence in a folder. Arrange it so that it is in the same sequence as your plan and/or your forecasts. If you are asked to provide this evidence it looks good that you are organised and can find the relevant information quickly. Can you imagine how bad it looks when the bank manager is waiting for someone to find a piece of paper and they haven’t a clue where they filed it?
On The Day Of The Meeting
Ensure you have left sufficient time in your diary for the meeting. It’s amazing how often I hear of people forgetting they had booked an appointment. They are then rushing to a meeting and could be late – not a good start.
Be early for the meeting and dress appropriately. If your business is one that requires you to wear a suit, then it’s appropriate to dress the same way for the meeting. If you are running a shop where you can choose to wear what you like, then be smart but casual. Remember, if you haven’t met your bank manager already, then you should be thinking about making a good first impression. You’ve heard the phrase that “you never get a second chance to make a good first impression.” If you wish to portray to the bank manager that you are a smart business-minded person, then let them see it before they feel it.
Hopefully, you’ve brought along your copy of the business plan in your presentation folder. Whilst it may seem obvious, consider how you transport your folder. I’ve seen beautiful, organised business plans with supporting documentation carried in a supermarket bag – it just doesn’t look right.
If the meeting is on your premises such as your house or a place you selected, be the host and offer to make or buy the manager a drink. You take the lead which shows them that you are comfortable meeting strangers in the business world. You need this skill to survive in business.
After any initial small talk, take the lead again and open the meeting by asking whether the bank manager has read the plan. Hopefully they will have, but occasionally they won’t. Whatever, the situation, ask what they know about your business or industry. They may have a customer who trades in the industry and therefore some industry knowledge.
Most likely, they will have a series of questions to ask you. They may be validating what you say or they may be looking for more information e.g. you may be asking for start-up finance to purchase a machine and they want to understand more about what the machine does and how it will help the business. This should have been included in your business plan but sometimes they are checking whether you have considered all of the possibilities and investigated numerous machines in the market. There may be a cheaper model by a competitor brand or from the same brand. They may be asking why you selected this model rather than the cheaper model.
The bank manager is there to ascertain if there is additional information not contained in the business plan. They are constantly assessing your character. Bank managers use the acronyms CAMPARI and ICE to assess applications and applicants. The letters stand for:
- Character – are you a good character to run a business?
- Ability – from what you say and how you behave, plus your background, would you be able to run the business?
- Means – this is the financial situation in respect of investing some of your money
- Purpose – is the purpose of the finance a good enough reason and legal?
- Amount – is the amount you require reasonable and realistic?
- Repayment – does the business demonstrate an ability to repay the finance?
- Insurance – what happens if it goes wrong?
- Interest – can you cover the cost of the finance
- Commission – this relates to any bank fees and whether you have included this in your forecast
- Extras – this may be other things the bank will require. It could be security, selling you a product etc
Expect questions about your forecasts and take your time answering. On many occasions I have seen potential business owners stumble here because they didn’t write the forecast and they didn’t understand them.
When the questions appear to be drying up, take the lead and ask what the bank manager thinks about your plan and your business idea. It’s worth getting an opinion. What would they have done differently? Is there something you’ve missed which needs further thought or investigation?
You also need to know what happens next. Before the meeting ends, your bank manager should explain the application process which usually means they will send your plan with their report to Head Office for approval. They should provide you with realistic timescales for them to receive an answer and if positive explain what happens next.
If you have been professional throughout the application process, written a thorough business plan with numbers that stack up, and arranged and conducted the meeting well, then you have a very high chance of the bank agreeing to your request. The business world needs more professionals, not amateurs. So, the more you take time and sensibly consider what you are doing, why you are doing it, the result you want to achieve and how you plan to achieve these results, the greater the chance you have of securing funding and continuing to trade in the future.
I hope this series of articles has been useful to you and that you can now confidently write your business start-up loan application. It takes time to piece together information and it’s not something you can rush. However, when done professionally, it makes a huge difference and creates a great impression with your bank manager. Good luck!
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