Barclays Chief Executive Jes Staley has recently announced that they would be tightening their lending criteria ‘just to be prudent’, amid stunted economic growth that he put down, at least in part, to Brexit uncertainty. So what does this tightening lending criteria mean for businesses?
Firstly, much of the impact will depend on how many other lenders follow Barclays’ lead. If they all follow on, then funding will become more difficult to find, and in an economy where growth is slowing, that may cause some businesses some problems.
Any reduction in the availability of cash for lending makes business more difficult and can create a ‘catch 22’ situation where the economy tightens still further as a result.
How can you increase your chances of a successful application?
Borrowing is always going to be more difficult in the future than it ever was before the crash of 2008.
- Successful funding applications need to be supported by strong evidence of affordability, which can include business plans, cash flows, and detailed forecasts. Having close control of the finances in your business every day can help you to develop the necessary supporting evidence should the need for funding crop up. It could be that a golden opportunity to achieve your goals arises, and if you already have your internal finances working well, you may be well placed to take advantage.
- Reliance on the traditional funding options has been eased by the availability of newer options, including Crowd Funding and what are classed as ‘alternative business funding’. These solutions can include both secured and unsecured options and can be a perfect solution if your business is less appealing to the banks.
- The best way to avoid the pain of sourcing funding though, is to avoid the need for it entirely! This sounds flippant, but a concerted effort over time can remove the need for funding. Building a ‘war chest’ of cash for when a rainy day arrives can be an extremely shrewd move, and is one that many business owners are preferring to rely on. Close control of your finances, including control of your debtors can help you develop your reserves.
If your internal finances are in a less than ‘tip-top’ state, or you are worried by the potential of tightening lending criteria, get in touch now to find out how we can help. We can do as little or as much as you’d like us to around improving your internal finances, from training your team to keep you far better informed for the future or providing you with ongoing figures that we prepare.
You can read more about the Barclays announcement here.