It's not a happy time in the economy at the moment but as the impact of the credit crunch and crashes in the banking sector are beginning to emerge, I am seeing businesses who are feeling unfairly treated by their banks.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>

As has happened in previous economic downturns, the banks are tightening their financing, even to successful businesses.

It the past month alone I have assisted several clients with challenging financial situations. One was a referral from another satisfied client. They had a highly successful exporting business selling into fast expanding markets and so asked their bankers of 22 years for an increase in their overdraft from £90K to £100K. You might like them think that this was a reasonable request. The bank's response was to say they we glad that the MD had contacted them, and that he had pre-empted a call from them. They wanted to change the client's financial arrangements reducing their overdraft facilities to £30K and establish a £60K loan.

At this point they requested my help and I stepped in and using contacts at other banks arranged for another interested bank to visit. The result was an offer of an £125K overdraft, and confirmed in just one week!

I will now be controversial now. There is an old adage in consulting, 'banks only want to lend you an umbrella when it's sunny.' Well that's true in some cases, but sometimes it's about not providing sufficient information, (i.e. a good business plan). In other situations it's more a case of utilising the right financial product.

I work closely with a wide range of banks and other institutions. Often the problem is that the bank is not the best source of money, in other cases my approach is to get the client 'investment ready', before using contacts in the business angel network or use another form of finance.

Another good example was a second client who had already put one of their two companies into administration and I was in the process of restructuring and refinancing their other business at which point their long standing bank then gave them just seven days notice for cancellation of their invoice discounting facilities.

This company felt that they were being kicked whilst they were down and already rushing around trying to deal with the fallout from the administration of their other business. The good news was that after a few calls within a few days we had six invoice discounting companies quoting to offer the facility at a lower cost. Ultimately the bank will lose out both on the profit from the invoice discounting facilities but more importantly they are likely to lose all of the business and of course the client is telling everyone they know about how they felt about their bank.

Another adage is in consulting is 'sometimes it's not what you know, but who.'

But it is always vital to get advice if you find your business to be affected in this way

Alan Briggs

Dynamic Business Strategies Ltd

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