Starting a Business | SEO & Google

Business Banking

Banks, we sometimes forget, are businesses looking to increase customers and profits - the same ideals as you've probably stated in your business plan.

Personal banking and business banking are two very different arenas, but there is a lot you can do to make sure that your business is enjoying a good service and a bit of personal attention.

Although a sawn-off shotgun will probably get you the cash you require, there is another way.Thankfully most banks do not try to tempt corporate customers with gimmicks and freebies, because they know it won't work. As a customer looking for a banking solution, you hold the power to take your banking wherever you please, based on hard facts: the charges. The charges that banks apply to business accounts vary from harsh to daylight robbery. Business banking is a cash cow. Don't be fooled by the glamorous welcome packs and glossy brochures; look at how much it costs to present a cheque, accept a credit card payment or transfer money by BACS or CHAPS. Banks can and do charge for merely opening an account or sending you a letter, and it's not cheap. In return, as a customer you are more likely to be able to arrange for a business loan or overdraft - but don't confuse this for benevolence; lending is also a way for banks to make lots of money, very fast, through the interest rate and terms they offer you.

On the bright side, banks provide a huge lifeline to businesses by offering a helping hand, especially in their formative years when it counts. Banks are very keen for your business to succeed because they will make money out of you for a very long time - in return for this expected 'loyalty', you are in a position to open an account on the understanding that you expect both a loan and an overdraft facility. Ordinarily you will be introduced to an account manager who will be assigned to your account. Charges for this service will vary, but it is very shrewd to befriend this person. Get them introduced to you and your business right from the start. Even if the business plan is at a draft stage, let them take a look and offer suggestions. The more exposure they have to your business and your thoughts, the more receptive they will be when it comes to giving you cash - be it loans, overdrafts or a reduction or waiving of fees. Your account manager will have you and many others on the books - ensure that you are their most exciting account.

BIDING YOUR TIME

A new business without any previous history is always at a disadvantage. No matter what figures are put on a spreadsheet, until you start trading and the bank is able to build a profile, lenders will be wary. However, no matter what opening loan or overdraft facility you are offered, within six months of trading a profile begins to form and you are able to look at your bank as a potential source of second-round funding. A bigger loan or overdraft facility is more likely to be granted once the business is set up and operating. Once the bank sees money coming in and out of the account, and you have shown your account manager the PR, advertising and CVs of key personnel you have attained since launch, all the odds begin to stack up in your favour. Show the bank that your business is really taking shape, along with detailed plans about how you intend to use the money, to the last pound, and justify why there is a sudden need for it now when there wasn't before. The bank will probably look for security on the loan. Make sure you are certain that the money will indeed lead to increased business - don't pump more good money after bad.


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