How to get that bank loan if you are an SME- some tips
Standard Chartered's SME Banking chief Phang Yew Kiat sets out dos and don'ts
Mr Phang outlined what he termed the 'seven Cs' that go towards making a successful bank loan application.
They comprise the character of the owners, who must be reliable, transparent and have good personal credit histories; the condition that the business is in, including its financial health; its capacity for growth; the commitment of the owners to the business; control over the day-to-day running of the business; the collateral that is being put up for a loan; and whether SME bosses exercise common sense when assessing risks and investment opportunities.
He added that commercial banks would be reassured if an SME had managers working alongside the main boss, and would be particularly impressed by a professional set-up with many talented individuals.
Apart from securing adequate financing, SME bosses needed to attract top talent if they wanted to continue to grow, Mr Phang told The Straits Times.
'Very often, SME owners like to bring in people who listen to them on how to execute instructions. But there comes a point where you won't be able to grow if you don't have talented people who can effectively make decisions when you're not there,' he said.
Conference speaker Wee Chin Chuan, a director at Oriel Management Consulting, said banks tended to steer clear of firms with poorly drafted business plans which failed to articulate how cash was to be generated and repaid.
He pointed out that companies reduced their chances of a loan approval if they flooded multiple banks with applications.
'This gives financial institutions the impression that the company is hungry for money, and could be in trouble... It should only market to suitable financial institutions, and could get advice on this from consultants or the Enterprise Development Centres,' he said.
Mr Phang outlined what he termed the 'seven Cs' that go towards making a successful bank loan application.
They comprise the character of the owners, who must be reliable, transparent and have good personal credit histories; the condition that the business is in, including its financial health; its capacity for growth; the commitment of the owners to the business; control over the day-to-day running of the business; the collateral that is being put up for a loan; and whether SME bosses exercise common sense when assessing risks and investment opportunities.
He added that commercial banks would be reassured if an SME had managers working alongside the main boss, and would be particularly impressed by a professional set-up with many talented individuals.
Apart from securing adequate financing, SME bosses needed to attract top talent if they wanted to continue to grow, Mr Phang told The Straits Times.
'Very often, SME owners like to bring in people who listen to them on how to execute instructions. But there comes a point where you won't be able to grow if you don't have talented people who can effectively make decisions when you're not there,' he said.
Conference speaker Wee Chin Chuan, a director at Oriel Management Consulting, said banks tended to steer clear of firms with poorly drafted business plans which failed to articulate how cash was to be generated and repaid.
He pointed out that companies reduced their chances of a loan approval if they flooded multiple banks with applications.
'This gives financial institutions the impression that the company is hungry for money, and could be in trouble... It should only market to suitable financial institutions, and could get advice on this from consultants or the Enterprise Development Centres,' he said.
Comments
misunderstandings I have read about this lately.