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Small Business Finance: Business Banking Blues

Has your Business got the Banking Blues?

Your Cash flow is strong but your bank is calling in your loans - WHY - You wonder?

These represent very real concerns that are all too common in today's world of bank client portfolio restructuring. Banks will and do asses their exposure to various industry sectors, business profiles, and their degree of real estate asset backing and often move on business they deem outside these risk profiles.

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Loans to Lifestyle are specialists in both Business turnaround solutions and  low doc commercial loans with an minimum 24hr conditional approvals. Our long experience in successful businesses and our professional planning accreditations means we both understand the needs & operations of business and are able to secure the best finance package for you.

Today up to 1 in 3 WA businesses in some sectors are experiencing significant pressure from the recent round of bank rationalisations. You may question why all the commentary about foreclosures and interest rates movements centres on the homeowner when “Mum and Dad homeowner” are a huge proportion of society. Why don’t you hear commentators discussing the impact on Mum and Dad business owners” much more than we do?

"It’s absolutely in your best interests to support the bank that help's you find a way to manage your cash flow and met your debt servicing requirements."

The fact is that the vast majority of businesses in Australia are run by “Mum and Dad business owners” who are typically sole traders or employ 1 to 10 staff. The ripple effect on these businesses from their lenders decisions is very worthy of our attention and support. When a bank reduces a business cash facility, it puts unnecessary pressure on the cash flow of the business. Increased cash flow pressure means higher prices, less staff, business reductions & closures so we get consumers spending less money. This means less jobs, less investment and, in my view, a growing likelihood that the Australian economy starts to go backwards.

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With a third of all businesses feeling the pain of cash flow pressures – it’s not surprising that “cash flow” is top of mind for most businesses. In fact – it’s actually key when you’re feeling the pinch because cash flow really is the fuel gauge of your business.

Now it’s easy to get “hot under the collar” over your banks’ attitude to your business – when times get tough and you see cash flow as a real challenge – you will get most reward from a lending partner who has the interest to get closer to your business and proactively share in your issues.

It’s absolutely in your best interests to support the bank that help's you find a way to manage your cash flow and met your debt servicing requirements. If they won't or don't, make a sensible and commercial decision, put your own longevity and financial viability above the lenders short term greed and MOVE ON. Banks are ultimately worried about managing risk – some take short term knee-jerk reactionary decisions, others look longer term consistent planning.

You will find that proactively identifying the debt servicing risks in your business and jointly (with your lender) coming up with solutions is a great strategy to secure a long term future for your business.

So what to do if you’re under pressure and your bank isn’t “playing ball”? That's were we come in. You're not on your own, so give us a call and let us assist you.

Old fashioned stand alone multi-peril crop insurance doesn't suffice - it has not survived the tests of time and even in it's hay-day, didn't integrate with lenders financial farm products. It was an expensive inefficient band-aid at best.

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