Page last updated at 23:55 GMT, Wednesday, 19 January 2005

How to impress the bank manager

Flower growing business
You need strong financial backing to make your business bloom

Whatever your idea for a new business, it is likely you are going to have to speak to your bank manager about borrowing some money.

Here Paul Lynam, chief executive NatWest & RBS Business Banking, explains a few tricks of the trade, and exactly how best you can impress your bank manager.

QUESTION Jenny Haywood, Scotland
I believe there is an unmet demand for a garden centre where I live, and I am just starting to investigate how I could meet that need.

I am a graduate in botany, and a keen gardener myself, but have no qualifications or direct experience in horticulture or running a business.

Do you think there is any way I could get finance to either start my own garden centre business or to buy in as a franchise holder?

I would be willing to undertake further studies if you think this would be necessary.

ANSWER Paul Lynam, chief executive NatWest & RBS Business Banking
Firstly it is good to see that you have already started your research - this is one of the most important components of a good business plan and having identified a gap in the market you are in an excellent position.

Your next step should be to develop a sound business plan, cash flow and sales forecasts, and then make an appointment with a business manager to discuss your proposition.

My team and I have seen thousands of business plans, from glossy multi-page brochures to a few numbers jotted down on a piece of paper.

In the end, the best ones are those that cover details of the proposed business, such as key staff, business assets, finance and a local analysis, along with workable, realistic ideas.

Applications for borrowing are assessed on the specific business proposition, and will take into consideration your experience, knowledge and ability to demonstrate that you can successfully manage a business.

Franchising is another option that you could consider.

Whilst there are no franchised garden centres, there are a number of other franchises in that area of business, from garden design and build to lawn services and the provision of plants to the workplace.

QUESTION Pav Bahia, UK
I am in the process of opening my first business. I am putting in 50% of the start-up cost. I am also offering a guarantee on a free hold property. How can I get the best deal possible from the bank? This business will be a cash rich business.

ANSWER Paul Lynam, chief executive NatWest & RBS Business Banking
The first thing I would advise you to do is prepare a good business plan. Research your market and determine what you need to achieve your aims.

When presenting your case, remember you are selling the project as if the bank is a customer. Ensure that you are well equipped with the key facts and figures and have covered all eventualities.

Evaluate all the finance options available to you and be prepared to answer questions about any assets you may have in case the lender requires any security.

You could consider using your personal savings, the retained earnings from the business, equity or loan finance. The more security you can put towards the loan, the better the rate you will get.

You may also want to consider organising an overdraft facility that you can use as working capital as and when required.

If you decide to take a loan you should consider whether a fixed or variable rate product would meet your requirements. If you would like the piece of mind of regular payments, then a fixed rate option may be the best thing for you.

If you want a loan that tracks base rate when base rate is low, then a variable rate would be more suitable. Your bank will be able to explain the options available in more detail. Many banks will offer an introductory period of free banking. You may qualify for between 12 and 18 months of free banking. If your business is cash rich, then a good savings account will offer you the best interest rates. You could also consider other ways to use any positive balances to benefit you.

Some banks now offer offset mortgages for businesses, which allow you to offset positive balances on your business current and savings accounts against your personal mortgage.


To ask Paul Lynam a small business question use the email form below.

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