Fi­nan­cial Lit­er­acy 101 pre­sented by Bank of Saint Lu­cia

The Star (St. Lucia) - Business Week - - FINANCIAL TIMES -


Accessing credit has been for the most part one of the most salient is­sues for small and medium sized busi­nesses in Saint Lu­cia. The hard truth is that Banks are less likely to fi­nance startup busi­nesses. Bankers dif­fer from in­vestors, in that de­pos­i­tors’ funds are lent to those who need it with the ex­pec­ta­tion that these funds are paid back. Banks will not loan money be­cause you “be­lieve” in your busi­ness plan. Af­ter all, ideas do not pay loans. Banks and fi­nan­cial in­sti­tu­tions have an obli­ga­tion to pro­tect de­pos­i­tors’ money, and will not risk these funds solely on spec­u­la­tion.

On the path to accessing credit, it is im­por­tant to know the ba­sics even be­fore you ap­proach your fi­nan­cial in­sti­tu­tion for funds. Know­ing who you are and what you bring to the ta­ble are es­sen­tial. If your busi­ness is rel­a­tively new or if your re­la­tion­ship with the bank is new, you will be re­quired to pro­vide fur­ther in­for­ma­tion.

The more in­for­ma­tion pro­vided, the eas­ier it is for the bank or fi­nan­cial in­sti­tu­tion to thor­oughly as­sess the el­i­gi­bil­ity of the ap­pli­cant.

Banks and fi­nan­cial in­sti­tu­tions re­quire key doc­u­ments to de­ter­mine if a busi­ness qual­i­fies for a loan, and hav­ing a solid busi­ness plan is crit­i­cal in this re­gard. Here is a brief guide on what is typ­i­cally ex­pected:

The most im­por­tant ques­tions to ad­dress:

In­tro­duc­tion & Over­view/Ex­ec­u­tive Sum­mary – What is it about?

Man­age­ment Struc­ture – Who are you?

Op­er­at­ing/Strate­gic/Mar­ket­ing Plans – What do you plan to do? Who is your in­tended market?

Fi­nan­cial State­ments/Re­quire­ments – What do you need? How do you in­tend to re­pay?

What are the Banks’ Ex­pec­ta­tions?

Clear In­di­ca­tion of Busi­ness Back­ground

Your Ex­pe­ri­ence/Qual­i­fi­ca­tion in the given field

In­tro­duc­tion of Man­age­ment of your busi­ness

Fi­nan­cial Pro­jec­tions

Three Crit­i­cal State­ments:

In­come & Ex­pen­di­ture

Bal­ance Sheet

Cash Flows

Pro­jected monthly for first year and an­nu­ally there­after

A com­par­i­son of your pro­jec­tions to sim­i­lar in­dus­try av­er­ages if avail­able

Align­ment of Fi­nan­cials

The credit sought should be in line with the fi­nan­cials out­lined in your plan

En­sure that your cash flows are re­al­is­tic and ex­plain

How much cash is re­quired and why it is needed

A man­age­able busi­ness plan with re­al­is­tic pro­jec­tions will as­sist con­sid­er­ably in ap­proach­ing your fi­nan­cial in­sti­tu­tion.

“Banks and fi­nan­cial in­sti­tu­tions have an obli­ga­tion to pro­tect de­pos­i­tors’ money, and will not risk these funds solely on spec­u­la­tion.”

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