With a tailored business banking proposition on offer from each major high street lender, it’s difficult to identify the real differences in the service and finance opportunities available to entrepreneurs.
From loans to the banking package itself, we want to help readers decide which bank best suits the needs of their company.
Here, NatWest’s head of business development discloses the secrets to obtaining finance from the lender, before one of the bank’s entrepreneurial customers explains the kind of service fellow founders can expect from NatWest’s offering.
For small business owners, NatWest offers fixed rate loans from £1,000 to £35,000. We’ve looked at official NatWest figures to see how strong the bank’s appetite is for startup lending.
In 2015, NatWest committed £956m in small business loans to entrepreneurs, and by the end of 2016 the bank surpassed the £1.36bn mark.
So far in 2017, NatWest has committed around £500m in small business loans, and is set to reach another landmark by the end of the year. The figures suggest NatWest’s lending budget for small businesses has grown significantly in the last three years.
Accessing bank finance can be a daunting prospect for inexperienced founders. In reality, the level of entry is fairly welcoming and open to almost any business regardless of size.
What the bank says: Haydn Thomas, NatWest head of business development
Business Advice sat down with Haydn Thomas, the bank’s head of business development, to get an inside look at how the bank’s application process works, and what the NatWest advisors want to see from ambitious entrepreneurs.
Is the business plan the most important thing to a NatWest business banking advisor?
“For me the business plan is vital to the success of the company – not just for seeking finance.
“If people prepare a plan for the purpose of seeking finance, then it’s clear they haven’t fully planned out their long-term goals and aspirations. It should be a short, medium and long-term plan. If you haven’t got a plan for the business, how are you going to make it a success in the future?”
How important is the presentation of the plan?
“We look at content over style. People don’t need to spend a lot of money making a business plan look fancy.
“Pitching for investment is very much about the entrepreneur. Applying for bank finance is more about the facts and figures, rather than blowing the socks off in the presentation.
“Purpose is one of the key things we look at. The CAMPARI assessment (character, ability, means, purpose, amount, repayment, insurance) is still an important tool for a lender.”
Should applicants make a clear and convincing case for how the loan will be repaid?
“Repayment has to be realistic and tie in with the owner’s targets. If your financial forecasts are showing an unrealistic surplus, then that would sound alarm bells.
“There are some great cloud-based accounting packages that can help build forecasts. Get out there and find the right support and advice – we offer surgeries to help with this. Make sure you seek out advice early on.”
Can applicants expect a tough Q&A?
“The level of debt to an extent determines the level of discussion. If you look at the simplest of our unsecured loans through our online platform, that decision is made by drawing on information from the bank account and credit history of the individual and is system generated. There would be no interrogation because the system knows enough about those individuals.
“If you move into the relationship management proposition, the process will be working with the customer to make sure the application is realistic – can they afford it, is it for the right purpose. When we submit applications to our credit offices our sanction rates are above 85 per cent.
“Quite often we will discuss different options with a customer to find the right way forward.”
What sets alarm bells ringing?
“A poor credit history is the biggest warning sign. Unrealistic forecasts would be the other. There’s a lot of market data out there which helps with forecasting. These aren’t problems you can’t get past – we all know what the entrepreneurial world is like. People fail for a variety of reasons and get back on the horse and are successful. It’s more of a discussion point. If we believe the proposition is backed up, we will look to find a way around it.”
Read on to hear what one account holder had to say about their experience banking with NatWest
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