Smart SMEs Bank on Knowle dge One of the most common misperceptions around commercial debt is that all banks are the same, but as Pindara Magazine discovered, a better understanding of lending criteria can result in real savings for small business owners. Understanding the risk appetite of banks can result in significant savings by Australia’s diverse SME (small medium enterprise) sector, according to a leading financial adviser with more than 30 years banking experience. There’s no one size fits all and the cost of funds for banks varies depending on a range of factors, including internal pricing structures and the risk profile of the lender. Managing Director of Cooper Financial Connections, Peter Cooper, says the banks have varied ideas on different industries. “It is important to understand that no one bank has the same approval process. In years past, the manager had the ability to approve various styles of loans from housing loans to bridging loans to commercial loans, to leasing,” he says. “In the current environment, this has changed significantly. My advice to any SME is to gain a better understanding of this shifting lending landscape. To do that, you have to sit down and put pen to paper. I have so many discussions with business owners and the one thing that reoccurs each time is they wish they had a better relationship with their bank.” While communication may seem like the obvious key to garner the best possible result from your bank, Cooper says that unless business owners can write down a plan as to what their requirements are, banks have little hope of understanding them. “It’s important to remember the person you are completing documents with and who may only take notes is not the approver, but rather the conduit between the branch and credit department. They could have 10 appointments per day,” he says. Another thing to keep front of mind is that banks are like any commercial entity in that they are in business to make a profit and to deliver shareholder value. “On the other hand, the customer wants value for money. It’s important for customers to understand what banks are looking for by way of background and information in order to make an informed decision as to loan suitability,” says Cooper. Banks have similar guidelines, but use different language when describing what they want in terms of loan submissions. “Business owners need to create a word document that covers the history of the business that can be updated over time and be ready to give to their banker when required,” he says. Finance pindaramagazine.com.au Pindara Magazine 111
Pindara Private Hospital Magazine - Issue Two
To see the actual publication please follow the link above