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Banks should support Growing Businesses … ‘unconditionally’ …

Posted on 22/09/2014, 14:47

Our prime role as parents is to support our children to grow – in mind, body and soul – to a point of maturity and independence.  Often, the needs and demands of our children lead to support being ‘unconditional’. Frequently accepting that certain circumstances are not ideal, are undesirable or perhaps simply wrong! But we provide support nonetheless … because imperfections and even failure are all part of the Growth and Maturity journey.

Should similar unconditional support be extended to SME Business Owners?

Well  No! Clearly no Bank would prosper under such a reckless regime … but … to what extent should ‘conditions’ be applied? Are they necessary in every stage and area of Business Growth?

  1. Existence     the Creative period
  2. Survival        the Direction period
  3. Success        the Delegation period
  4. Take-off       the Co-ordination period
  5. Maturity      the Collaboration period

Naturally there are the prudent conditions / covenants attached to Lending Propositions to Growth Businesses – and sound principals are never far from the analysis process, as conveyed in the old lending mnemonic – CAMPARI – Character, Ability, Means, Purpose, Amount, Repayment, Insurance

But flexibility is invariably applied to ‘conditions’ applied across ALL phases , as well as interpretation of what is deemed good, bad or indifferent?

There is one Critical area of business where Banks perhaps should apply a far less ‘unconditional’ approach and be far more ‘Conditional’ … and that is meaningful Financial Information.

Often the need for Financial Information is seen as purely a Bankers Condition – and only necessary to substantiate a Lending Proposition or provide future comfort. Yes, this is true in part. BUT it is just as critical to an SME Business Owner to know the Relevant Financial Information required to direct and monitor the business to achieve Growth ambitions and create sustainable profitability.

Sharing this essential f Financial Information is not just for the Banks’ benefit – if such data is properly interpreted and actioned by the business – AND shared with the Bank – then a thriving business is more likely to be the outcome … As well as a fruitful Banker <=> Business Relationship.

Whether this is a hard hitting condition or a l light touch condition will depend on circumstances, but one thing is certain – for both Banker and Business – a Condition it should be.

As Growth moves towards Maturity, ‘light touch’ support is always needed on an ongoing basis – as many a parents’ wallet will attest!


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