Head of external affairs for Lloyds TSB Commercial Finance, Stephen Pegge, has spoken to thisismoney.co.uk explaining what businesses can do to increase their chances of accessing finance.

According to Pegge, businesses should be focusing on cash. Businesses that have had loan applications turned down should focus on what lenders want to see including, managing their cashflow carefully, producing relevant forecasts and sharing information with lenders.

This article appeared on thisismoney.co.uk under the title “How to get a bank to give your business money”.

Companies are being urged to plan how they release “recession era” accounts due by September in order to avoid unnecessary credit rating downgrades.

Businesses with December 31 year ends – one of the two most popular during the year – have to file their accounts to Companies House within nine months and many will show declining profits or losses.

Accountants and credit insurers have said that if the accounts do not reflect more positive current trading then companies should consider releasing more up-to-date trading information.

Lloyds Banking Group is trialling sophisticated software to validate the monthly financial records of business borrowers.

In response to the survey, Forum of Private Business Chief Executive Phil Orford echoes the CreditPal message that “by ensuring they approach their banks armed with proper management accounts and financial projections, entrepreneurs can significantly boost their borrowing prospects”.

Managing cash flow and Government red tape and lack of lending facilities were highlighted as some of the main challenges faced by today’s businesses in the annual IFA Business Barometer Survey.

The Survey, by the Institute of Financial Accountants (IFA), which will be released on 24th June, canvassed the opinions of IFA members. The IFA currently has over 10,000 members.

Questions focused on the plight of small businesses in post-recession UK. The challenges businesses claim they are facing include:

George Derbyshire from National Federation of Enterprise Agencies said:

“There is no question that a thriving small business sector will be central to economic recovery, and the IFA and its members are uniquely well-placed to test the temperature of the sector. The findings of the Barometer Survey provides an agenda not only for the Government, but for all of us who work to support small businesses.”

IFA Members were asked what their experience was of the willingness of banks to lend. Only 2.6% said they were ‘very willing’. Whereas almost 37% said they were unwilling and a resounding 25% claimed to be ‘very unwilling’.

The general feeling is that banks are too risk averse. They are not flexible and SMEs are finding it almost impossible to obtain credit. When banks do lend it is always accompanied by strict personal guarantees, excessive charges, bigger deposits, and shorter loan periods.

The BBA has revealed six binding commitments from the UK’s banks to support the small business sector, a situation which businesses can help themselves with by using CreditPal to support applications for credit and finance.

Currently the high street banks are lending a total of £720bn to all UK businesses. A further £100bn is already committed to businesses of all types and is available to be used at the discretion of each business.

 We expect and are ready to increase lending over and above these amounts as the economy picks up. Banks will play their part in financing growth in UK. The fact that approval rates for applications received by banks have remained high despite the general deterioration in credit quality caused by the recession demonstrates this clearly.

The high street banks understand the concern of smaller businesses. They are lending £54bn to such businesses.  New lending of £500m is taking place each month to smaller businesses. Approval rates remain high here as well.

Overall, small and medium sized enterprises (SMEs) should be confident banks will lend to viable business plans with a demonstrated ability to repay. We have been working closely with the Department for Business, Innovation and Skills to develop a number of commitments in areas that they, and the groups that represent businesses, would consider most helpful. As a result the high street banks will adopt the following principles when dealing with SMEs.

Commitment to SMEs