The Banking Royal Commission fallout – 6 tips for SMEs to navigate funding requests

Here’s a quick question for you. Where would you go first for finance – a broker or a bank? In our experience, the majority of SMEs choose a broker.

Securing business finance from a bank has always presented challenges, but the recent industry shake-up thanks to the Banking Royal Commission has introduced further complications.

Due to government scrutiny, there will be increased risk management, more self-regulatory controls and a raft of other changes dependent on yet-to-be-released Royal Commission recommendations.

The outcome? Even if you’re kicking financial goals, the process of securing funding from banks is likely to get harder, not easier.

We asked a trusted bank executive for their top six tips for SMEs before you jump in to securing finance.

1. Spend adequate time on preparation. Make sure your financial information is as up to date as possible before you see the bank. If you are a business owner, forecasts are always helpful.
2. Engage early and with confidence. If you’ve followed step one, you should be able to approach your chosen financial institution openly, with no underlying concerns. You’ll gain nothing by delaying.
3. First impressions count. It is absolutely critical you feel you can build a relationship with the person you are dealing with. Trust your gut. If it doesn’t feel right, move on and find someone else.
4. Get pre-approval if you can. Don’t be caught out focusing all your time and energy on securing finance; you also need to focus some of your time on how the capital will be invested.
5. Ask lots of questions. Make sure you understand all the documentation. Read it carefully and ask for a detailed explanation if you need.
6. Get legal advice. If you are not exactly clear on a document and what it means – don’t sign.

No matter how prepared you are, it will be more important than ever to have the right information and an experienced, well-connected partner with knowledge of the finance sector.

After many years in business and negotiating our own finance, the eccoConsultants team has forged many trusted relationships with both brokers and banks.

If you need advice and support in securing finance, please call Garreth on 0401 984 241.