Banks can no longer deny small businesses finance.

If you are running a business, getting finance from banks can be difficult. Was it not Mark Twain who said: “A banker is a fellow who lends you an umbrella when the sun is shining and wants it back the minute it begins to rain.” But a new system launched by the Forum for Private Business (FPB) recently might make the job easier.

The FPB’s new system will help its members get easier credit from banks by simplifying their management accounts.  This allows banks to make objective decisions about the credit worthiness of the company itself rather than always asking for security from its directors. The new system is called ForumCreditPal.

ForumCreditPal allows small businesses to upload their financial information and automatically prepare and present profit and loss balance sheets and two-year portable credit histories in the format banks require.  The system also sends this information directly to selected banks.  This increases the chances of having the application approved.

Leading banks have repeatedly told the Forum that information submitted by SMEs is often unclear and confusing, making it difficult for them to properly assess lending risks on a case-by-case basis.  In turn, many small business owners have reported that they are being rejected by lenders purely because of their size – or more often that their sectors are deemed ‘no go’ areas for lending.

“In recent years something of an impasse in bank-business relationships has emerged and it is important that we bridge that divide,” said the Forum’s Chief Executive, Phil Orford.  “The banks must do better – that is clear – but we are working with our members to provide the technology and financial skills they need to proactively establish their creditworthiness.”

Mr Orford continued: “Business owners seeking funding should understand that they are not helpless. There is support available to minimise their chances of being rejected for finance and to empower them to help themselves.  With banks moving towards requiring regular – meaning quarterly or even monthly – financial reporting there are obvious cost increase implications for small firms. ForumCreditPal empowers them to produce and present their management accounts in the right way and for free.”

For more details contact the Forum for Private Business on www.fpb.org.