How to approach a bank for cash?

Barclays’ commercial director, James Cliffe, tells ThisIsManufacturing what banks need to know before money changes hands

One thing that is certain, lending criteria at Barclays has remained consistent prior to and during the current recession. Companies can do many things to ensure that they are looking their best even before approaching a bank to seek lending. There are plenty of examples in every sector of companies that continue to grow demand despite recessionary conditions, demonstrating excellent management skills as well as sound financial management. Banks will also seek to find out what the ‘Plan B’ is in case things don’t go as expected, they’ll look for experience drawn from previously difficult trading environments, be it within the businesses or amongst trusted advisors.

When considering financing a good tool to assess your business by, and one that we regularly employ at Barclays, is CAMPARI. This stands for:

Character of the business – looking at the management, resources, skills, culture, industry outlook, competition and market.

Ability to repay – how is the business going to repay and from what source, this may include performing a sensitivity analysis.

Margin – the bank assesses the interest margin based on the level of perceived risk in the proposal.

Purpose of the loan – What is the loan for? Does the purpose make sense?

Amount of the loan – is the amount appropriate? Can it be repaid? What is the customer’s stake?

Repayment terms – how long? Where is repayment coming from? Is it certain?

Insurance – security against the possibility of the borrower being unable to repay.

Knowledge is key in a bank’s assessments of a valid business. Management must be realistic about their aims and understand whether their offering is the most appropriate to their market. Research of the competition and a clear line of thought of how to differentiate the business, giving it an edge, are important factors in the success of a business, and banks will look to see that borrowers have a clear strategy around this – what is the company’s USP?

James Cliffe
Barclays Corporate
Tel: +44 (0) 161 912 6695
Mobile: +44 (0) 7714 226359
Email: james.cliffe@barclays.com