Why Do Businesses Find it Hard to Find Credit

Aug 29, 2012, 04:05 PM

As part of this weeks audioboo Podcasts I spoke to Louise Hardy Business mentor at www.ne-bic.co.uk. I asked: there has been many stories in the press about the government pumping money into the banks, why are we not seeing any of it?

Louise stated, the bank will always lend on the ability to pay back - regardless of government involvement.

As an ex banker I know people will look at cash flow and ability to run your business.

If you don’t have proof of cash flow and show an ability to pay back you won’t get a loan.

It’s a catch 22 situation, as a new start up you can’t show what you have done over the last 12 months and therefore you don’t have the history to prove you can pay a loan back.

Is having savings a good way of showing you can pay back? I asked to which Louise replied, “Yes, if you can get into a habit of regularly saving it gives them (the lender) a guarantee that you have steps in place at the beginning”.