OD in Banks

Overdrafts in Banks

Every business has cashflow issues whether you like it or not. You’ll have to borrow money, and may have to do so at your start-up point. But what’s the best way to do it?
The simplest way to get at business capital is to ask the bank. If you have a sensible business plan they’ll almost certainly say yes. There are a lot of arguments in favour of using this sort of financing, chief among which is that you’re not going to give away any equity in your company and you’ll almost certainly be offered some free business advice along the way.
Your bank will want some sort of security, and if you’re starting up this will almost certainly involve your house. If you can resist this at all then by all means do – nobody wants to lose their home and although you might have faith that your business will succeed, there is no absolute guarantee of this. Other elements that will impress your bank will include:

• Your own money in the business. Nobody is going to risk their money when they can’t see you putting your own cash into the mix.


•A professional cashflow forecast, backed by market research. Every financier will want to see how their money is going to arrive back, and the banks are no exception. Factor in interest payments and whatever you do, keep the payments up – a bank will foreclose if it believes its cash is at risk.