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Building “that” Banking Relationship

Building “that” Banking Relationship. NOV. 2012. Choosing the right option: Debt v/s Equity. Debt or Equity what would be the best option?

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Building “that” Banking Relationship

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  1. Building “that” Banking Relationship NOV. 2012

  2. Choosing the right option: Debt v/s Equity Debt or Equity what would be the best option? • Deciding between equity financing or taking on a loan is a challenge all SME owners face. Should you go to a bank and apply for a business loan? Or should you look for an investor? 

  3. Building a sustainable relationship with banks Key steps • Building a Business Case • Knowing your need • Understanding your business risk • Role of finance manager/auditor • Presenting your case • What can the bank do? • Advisory role • Simple and transparent process • Need based product delivery

  4. Know your needs

  5. Understanding Business Risks

  6. Role of finance manager/auditor • Develop internal controls in the business. • Identify business challenges and potential opportunities for greater efficiency and results. • Identify potential financial risks eg. liquidity in the business. • Detailed analysis of financial data and its underlying reasons • Periodic Reporting to Banks.

  7. How to present your case? • Assessing the suitability of bank capital as a source of funds for the business.  • Matching business needs of capital with different products and services of the banks. • Preparing an thorough application for bank finance. • Share a detailed utilization plan of the facilities requested • Have a mechanism regularly update the bank of material changes to the business

  8. What do banks look for ? • Banks are in the business of lending and risk sharing • Banks seek information which is quantifiable, verifiable and sustainable • Different banks based on their preference and internal know-how define and operate in target markets of their choice • Lending is based on a variety of factors which the bank seeks to asses

  9. Cause for concern Re a son Absence of reliable information Inadequate accounting & financial statements High Risk Perception Lack of proper feedback/references from market Historical performance unavailable

  10. Typical approval process in banks

  11. Banks Disbursal Process

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