Credit clinics for borrowing businesses

Bank of Ireland has brought in a new initiative to support small businesses in need of finance. Irish Franchise Magazine looks at how small businesses and franchisees are set to benefit from free 'Credit Clinics'.

Bank of Ireland has come up with a novel way to support small local businesses and franchises that are seeking information about borrowing.

It is running a series of 100 free 'Credit Clinics' in its branches, which will help people to learn all about the loan application process and get tips and advice on what is required in terms of financial documents and business plans.

Start up small businesses tend to be run by one or two people with strong skills or knowledge about their own business, but can find the subject of finance a bit of a challenge. Some are quite anxious when it comes to approaching a bank for finance and are not sure what is involved in the borrowing process.

Often these businesses and franchises haven't borrowed before. They may have used their own funds to get started and are now looking to expand or get access to additional working capital.

The Credit Clinic is a new support for business and franchisees. The clinic takes a couple of hours and involves a presentation by a local business banker, helping those taking part through what they will need when applying for a loan in terms of documentation, accounts and a business plan, including all the steps involved in the process. The clinic provides a good insight into working capital and how a bank establishes repayment capacity for borrowed finance.

It means that they can come into a branch, meet their local business advisor and talk through exactly what is involved if they want to borrow for their business or franchise, regardless of the sector they operate in.

Part of the clinic is an open forum that encourages business owners to ask questions relevant to them and can chat amongst themselves about the issues they face. Each group will be small Ð between eight and 12 people - ensuring it is completely interactive and relaxed and that everyone gets a chance to ask questions if they wish.

Over 50 clinics have taken place nationwide so far and the feedback has been really positive. People like the fact this service has been made available to get information and ask questions in a supportive environment. There is also the option to set up an individual meeting with the bank afterwards.

The questions most often asked include how long it takes for a credit decision to be made, what kind of documents people need to produce and how important it is to have an up-to-date business plan.

Part of the reason Bank of Ireland decided to run the clinics is to positively demonstrate to businesses that the bank is lending to small companies and franchises. Bank of Ireland has seen an increased demand for credit this year from small businesses and farmers and wants to ensure that it is supporting customers where possible.

During 2012, the bank received 55,000 credit applications from businesses, 80 per cent of which were approved.

As a 'pillar' bank, it exceeded the €3.5bn lending target for the year to December 2012, providing €3.66bn in new and increased lending to SMEs in that period.

This was about 20 per cent ahead of the figure for 2011. The fourth quarter was particularly strong, with around 30 per cent of approvals completed in that particular quarter.