Is your bank really hungry for your business this year?
Private Matters, May 2012
Are there really more difficult lending conditions post GFC? We ask two of our banking specialists.
Tony Woods, a Director with Deloitte Private is first and foremost a career banker (with St George most recently) and emphasises a distinctly different view on the current lending policy of Australian banks.
“There’s a perception that it’s harder to achieve bank finance than pre-GFC — but where clients have a mismatch between perception and reality is more to do with how the business information is presented,” Woods says.
“From a banking perspective you need to be able to arm your relationship manager with enough information that they can tell your story to credit. And as advisors at Deloitte we can assist with how to actually frame that story; how to present the right information that credit would be looking for.”
So is it more difficult to get finance?
“I don’t believe it is,” Woods says. “In fact, in the current environment I believe banks have never been hungrier for quality credit deals.”
Deloitte Private Partner, Austin Scott provides further advice on the right approach to lenders.
“What we always recommend to clients is that they articulate a very clear strategy to the bank in the form of a business plan — this should set out what their objectives are, and how they intend to get where they want to go.
“As part of that they should also put together a financial piece, which will usually take the form of financial forecasts, supported by a robust financial model. The bank is really interested in mitigating their own risk, so what they want to see is how the business is expected to perform; how the money that they are lending to that business is going to be used — and importantly how it’s going to be repaid.”
Tony Woods agrees. “In the back of (bank) credit’s mind is the question ‘how can risk be mitigated’, and to that end they look to mitigate risk through understanding what is the bank’s second ‘way out’. That’s the terminology they use — generally clients don’t articulate that second way out terribly well,” he says.
“You must also stay close with the relationship manager and keep them informed regularly on how your business is going; there’s nothing stronger than a great relationship with your bank relationship manager so they are able to articulate your story to their credit department.”
As a career banker, Tony Woods’ message is unambiguous.
"The banks are hungry for business,” he insists.
For more information please contact:
Partner, Deloitte Private
Tel: +61 2 9322 3861