Question: I have plans for expanding my business, but need extra funding to get started. What criteria are banks looking for in credit and loan applications?
Conor MacMahon, commercial manager at Bank of Ireland replies:
A: In these market conditions all banks are completing a high level of due diligence. Approach your bank early and clarify what information is required. Allow plenty of time to gather the information and prepare ahead of the meeting.
Remember that the bank’s decisions will be made on the merit of the case you present. There will be questions as the bank will need to understand the business, the people |behind it and the proposed use of funds.
Each bank will differ in its approach to lending. Bank of Ireland continues to support businesses, whether new or existing customers, who have viable business plans and below are some questions which we believe will help |you prepare for a financing application:
What is the purpose of the loan?
Can you demonstrate the ability to service and repay?
What is your current |trading position?
What are your future plans?
What is your personal and financial commitment to helping the business plan succeed?
How strong is your management team?
What skills and resources do you have within your team?
How well do you understand the market — for example your industry outlook, competitors, suppliers and customers?
The best way to present this is in a business plan. Although most business financing is provided via banks, other options to consider include equity finance through external investors or industry and government schemes.
Question: My business is struggling and I wish to exercise the break option under my lease. Is it simply a matter of notifying the landlord and moving out?
Katie Elliot, solicitor with A&L Goodbody replies:
A: No. Firstly you should ensure that you are entitled to exercise the break option, particularly if you are not an original party to the lease. The break may be personal to one of the parties within the lease. If this is not expressly set out within the clause the break will be exercisable by the party named within the clause and its successors in title.
Secondly you must consider when and how you will exercise the break. A rolling break option can be exercised any time throughout the term. A break may be expressed to be exercisable after a certain date or on an agreed fixed date. Ensure you are serving the notice on the correct date.
Time is of the essence in the exercise of a break option. Some leases will have a form of notice appended. Do not vary from the agreed form.
Thirdly you need to consider whether or not the break option is dependent on the tenant having satisfied certain conditions such as, no arrears in rental payments and/or other payments, compliance with provisions for repair contained within the lease. If in doubt, seek advice.
Clarification — in last week’s Business Clinic we indicated that the minimum weekly redundancy payment was £330. This figure has risen to £380 since the |original response was |submitted.