Dear Aunty B,
We are cashflow positive, making money, and approached our bank to borrow funds for expansion secured by our business assets, good will and so on. The bank has told us that the deal has to go to accountants for review, and this is likely to cost us up to $50,000! (Since when did banks need accountants to add up? I always assumed banks were full of accountants.)
So we agreed to the review only to be told that after coughing up $50,000 even then we can’t be assured the funds will be on the table. Two years ago I sat in the same chair at the bank and was being “sold” to. Now I feel like a beggar.
Our crime apparently is that we did not meet budget forecasts (who has?). We are already paying through the teeth for our existing loan, with our risk margins two times higher and our business is very solid.
What are our choices? Is it better anywhere else? What do I have to do to not contribute our hard-earned funds to an accountant’s beach house?
Dear bank beggar,
Now you have got that off your chest, take a deep breath and repeat after me – the world has changed.
The sales people who were kings of the castle at your bank for the past six years have either been sacked or are sulking. Now the credit folk are in charge, and they are wandering the bank corridors with BIG RULERS.
Credit folk at banks like to double check and triple check. They are rewarded not for selling more but for not making mistakes. If budgets are not met, expect a whack across the knuckles and a trip to the accountant.
Of course the problem with this is the accountant will never share your view about your rosy growth prospects because they are realists (you might call them pessimists) and you are an optimist, which is why you are an entrepreneur and they are accountants.
What choice do you have? None. Zilch. Absolutely zero.
You shop around for another bank and that bank automatically assumes that you have been tossed out by your current bank. As if they are going to take on your problems. You are stuck with this and had better deal with it.
So get ready for your trip to the accountants. Be very conservative with your projections. Build in all the safety buffers and give the accountants and bank a very realistic view of what is happening.
Don’t promise anything you can’t be absolutely sure you can’t deliver.
And here is your revenge. Imagine a few years from now – as you have dusted yourself off, the fury will remain. The credit people will be back in their musty dark offices at the back of the bank and the sales people will rule again.
That is the time, my friend, when you will have your revenge. If bankers and accountants think they have long memories, well so do entrepreneurs.
You Aunty B.
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