Any financial borrowing has strings attached, as a differing ‘value’ is placed on a proposal and priced accordingly, just as a borrower has differing measurements of value placed on their needs. So, it’s important to find a lending partner who can make a difference and will understand stagnation as well as growth; the type of lender who recognizes there is complexity to weighing up a proposal and is willing to be flexible. Not an easy task for lender, or borrower, when the financial landscape is ever changing.
I keep being reminded that, despite small business owners and the self-employed not being able to access the flexibility or lending they want from their traditional high street bank, the bank remains first-stop on the funding – reasonable enough when it’s the only experience someone has of a bank, it’s all they know. The assumption is, that anything that `always has been’, remains still true, and not knowing everything about their lender is understandable – but assuming can be dangerous.
When compared to other lenders who can act quickly and overcome some conventional restrictions, high street banks’ freedoms are increasingly being restricted (to be fair, they are tied by huge amounts of legislation e.g. Regulation (EU) 575/2013 on Prudential Requirements, Capital Requirements Regulation (CRR) Directive 2013/36/EU, Capital Requirements Directive IV (CRD IV), which implement Basel III, Regulation (EU) 596/2014 on Market Abuse, Regulation (EU) 600/2014 on Markets in Financial Instruments, (Markets in Financial Instruments Regulation) (MiFIR) from 2018……) and they’re increasingly favouring larger companies over smaller ones.
Validation is a well-worn necessary habit for all banks and lenders, nothing is assumed, but banks want more of the hard-data and less qualitative information. When the elastic of uncertainty is stretched, having a great business plan and up-to-date data goes a long way, but the bottom line always needs sound, elastic financial support.
