Business banking with good overdraft - Holy grail?
Discussion
Just looking for a recommendation really. I currently run the business using a second account that is a personal one. Just one of the last things I havent got around to "professionalising" thus far.
With my current account I have a 2k OD but could really do with 10k ideally it would really help. I'm guessing the banks arent waving this kind of facility about
With my current account I have a 2k OD but could really do with 10k ideally it would really help. I'm guessing the banks arent waving this kind of facility about
The old adage - banks will only provide you with facilities that you don't need springs to mind - I.e - if your business has a strong cash flow that gives a bank confidence that the risk of giving you a £10k overdraft is low (I.e. You won't use it often) then you will be offered it.
You need to show a bank that your usage of the overdraft will fluctuate - that you will use it then pay it back in short order.
You need to show a bank that your usage of the overdraft will fluctuate - that you will use it then pay it back in short order.
Whilst you could have a chat with your existing bank about formalising things, just be aware they may not like the fact that you're using a personal account exclusively for a business - business bank accounts aren't generally free and it would be normal for a business to be charged a fee just for the provision of an overdraft facility whether you use it or not. They will undoubtedly want to help you switch to business banking products and my paranoid side would be mindful of the fact that they could conceivably pull the rug on the existing OD if they felt you were 'misusing' it, which might not help your cashflow. Are you running a limited company?
Whether or not they grant you a £10k facility is going to depend on your overall personal creditworthiness and extent of other borrowings (as you will need guarantee it personally) and obviously by scrutinising your business turnover and how well profits are retained. They will also try and use the opportunity to push other products, for example if you say you need an OD to ride out late paying clients, they're going to shove credit checking, factoring, etc down your throat. If its to acquire equipment they might prefer to offer you a loan instead. In other words be prepared to make a case for it...
Whether or not they grant you a £10k facility is going to depend on your overall personal creditworthiness and extent of other borrowings (as you will need guarantee it personally) and obviously by scrutinising your business turnover and how well profits are retained. They will also try and use the opportunity to push other products, for example if you say you need an OD to ride out late paying clients, they're going to shove credit checking, factoring, etc down your throat. If its to acquire equipment they might prefer to offer you a loan instead. In other words be prepared to make a case for it...
Thanks for the replies
The only reason an O/D would be handy is that the nature of the business dictates that sometimes stock might come along thats too good to refuse (part of the business is dealing in Lotus cars) Its hard as nails to get good stock and you can guarantee something brilliant will come up when we are fully extended. I have about 80k worth of stock currently under 20k of debt so our bank balance can vary wildly as you would expect but its almost never actually overdrawn maybe once in a year presently.
This is on the list to sort out next week we are with smile at the moment so co op business bank will be the first port of call as they are a bloody good bank from what we have seen so far.
The only reason an O/D would be handy is that the nature of the business dictates that sometimes stock might come along thats too good to refuse (part of the business is dealing in Lotus cars) Its hard as nails to get good stock and you can guarantee something brilliant will come up when we are fully extended. I have about 80k worth of stock currently under 20k of debt so our bank balance can vary wildly as you would expect but its almost never actually overdrawn maybe once in a year presently.
This is on the list to sort out next week we are with smile at the moment so co op business bank will be the first port of call as they are a bloody good bank from what we have seen so far.
fridaypassion said:
o co op business bank will be the first port of call as they are a bloody good bank from what we have seen so far.
Sorry, had to laugh at that!Its worth thinking about a few things:
They are not investors, so don't approach them expecting them to invest in your idea. They are a bank, and you want a loan (albeit in the form of an overdraft). So they will expect to see figures.
If you can see a good business manager, they do know what they are talking about, so they may offer you cheaper alternatives (eg a credit card with 2 months interest free could work out cheaper then an overdraft). They will also match the product to the need. An overdraft would not be right to buy stock, a loan would, for example. So despite you telling them what you'd like, don't get too upset if they tell you you cant have it.
If you have a limited company, there are various corporation tax laws which could be broken if you are not using a recognisable business bank account
How will your customers pay you? A business can have various options (eg a card machine) which could be very useful. Again, having the conversation with a good bus manager will help. How are you marketing your business? Whose doing the books? a good conversation with a good bus mgr will be well worth your time.
It will be worth a chat I think. I dont really want a loan we have a small loan already so dont want to add a permanent commitment to it. If we had a 10k OD we might only use it for 5 days out of 2 months something in that order its a sop gap rather than a functional overdraft.
We are a sole trader partnership at the present will be LTD later this year. Re payments we have an e commerce website but no real nead for a card machine as payments for cars are done by bank transfer. I wouldnt accept cards anyway for cars due to the chargeback threat which could be problematic!
We are a sole trader partnership at the present will be LTD later this year. Re payments we have an e commerce website but no real nead for a card machine as payments for cars are done by bank transfer. I wouldnt accept cards anyway for cars due to the chargeback threat which could be problematic!
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