How banks are evaluating lending requests

I was talking with a banker last week about their lending policies at the moment.

One thing was very clear. In the current climate, they expect companies to have up to date accounts.

The days of the bank accepting accounts from last December are gone. Now they are looking for much more up to date accounts – monthly accounts preferably, and if not monthly quarterly.

When they get the accounts the key areas they look to are the ageing of debtors, the creditors balances and the value of stocks and work in progress. They also like to see a healthy open order book. They also look to see what sort of commitments you already have. Finally, they look at your position with Revenue Commissioners.

They know, as much as anyone else, how tight things are right now and while they are willing to lend they will try to minimise risk as much as possible.

If you are looking for funds, then you need to be able to demonstrate clearly why your proposition is a low risk proposition.

If you have any comments on this article or if there are any areas you would like to address, please do let me know.

Best Wishes

Jim

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