Where to go when the bank says no
The concept of credit and lending has its roots in the ancient world but banking in its modern sense only started to evolve in the 14th century. These days, banks are the primary source of funds for most individuals and businesses, however their monopoly over the lending markets is starting to diminish and the funding market has evolved.
I firmly believe that when a business has a requirement for additional funding they should begin by seeking advice, just as you would consult a mortgage advisor when buying a new home or a wealth manager when looking to invest. This advice can be provided by your accountant or as a specialist service within the accountancy practice, just as we do at Cowgill Holloway with our Business Funding service. Your advisor should then establish what funding you require, how much, why you need it, speed, flexibility etc., so you can be matched with a funder that can provide the right solution for your requirements.
Resist the habit of turning to Google, as the answer to your funding question will depend on which lender spends the most on Search Engine Optimisation. While that lender may be able to provide you with the £50,000 you wanted, it may not the the right product, or take into account that there will be another funding requirement in 6 months’ time.
Given that all trading businesses in the UK will have some form of bank account, your advisor will often tell you to speak to your bank first as this will usually be your cheapest form of finance, regardless of what product you’re looking for. Those who don’t ask you to speak to your bank first may have an ulterior motive because some bank products don’t pay referral fees. Good advisors, however will point you towards your bank and also start investigating other products and providers, of which there are many, which is why expert funding advice is so important.
There are now more funders than ever offering more products than ever, with still more innovative products coming to market. It is often hard keeping u-p with the continually evolving lending landscape, even for someone who works in this field! Most advisors will be completely independent and, therefore, able to introduce you to any lender in the marketplace. Of course they will have a smaller panel of trusted lenders with whom they have worked before and know they can deliver, which is to everyone’s benefit. A lot of non-bank lenders out there won’t be household names (yet), however this should not put you off, especially if you trust the advice being given to you and that they are recommending them!
So, to answer the original question, seek advice before approaching your bank so you can get an understanding of what product is the best for your business. You can then ask the bank for a particular product, rather than choose one they want to sell you. At the same time have a trusted advisor explore other options just in case the bank says no.
Find out how Cowgill Holloway’s Business Funding service can help you.
This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.
The information was correct at time of publishing but may now be out of date.