The last of three articles by Murray Fulton on Funding for Growth is one of the topics for which he is best known. In this one, he takes a closer look at banking and how it works.


Your business is bankable (eligible for bank funding) when you can demonstrate the following:

  • A history of growth and development – proof can be tracked by revenue, gross margin, quality and quantity of clients, market position, sustainability, people, IT systems, leadership and management. If the list seems daunting and lengthy, the bank does not need to see growth in every one of these areas. However, it certainly does need to see growth in some of them. Also, a willingness and capability to grow and develop the rest.
  • A positive, and growing equity vs total assets percentage. This is a primary area of focus for a bank, after profitability and cash flow – namely, balance sheet strength.

The story of the relationship between the last three years’ trading and financial history, the integrated financial forecast (IFF) submitted, along with a balance of the information that a bank needs, will determine if the funding requested is granted or not.


How does a bank operate?

Knowledge is power so it is important to understand how a bank works and operates.

There are two components to bank operations – the front end and the back end.

  • The relationship banker, with whom you deal already or (in the case of a new bank) to whom you are introduced, is “the front end”.
  •  The credit manager assigned to you is ”the back end”.

The relationship manager will work with an assigned credit manager. You will not meet the credit manager but must work instead through your relationship manager. Submitting factual and forecasted information in a way that the credit manager finds helpful and understandable is critical. This is the approach that I take when working with clients. If the credit manager understands the numbers and the business case presented and is comfortable from a bank risk management perspective, then it is likely that the funding requested will be approved by the bank. The reverse is also true.

You also need a relationship manager who has an established relationship with their credit manager. This is what I call, “cascading credibility”. In other words, you must give your relationship manager the information required and they must also have the confidence in you to engage with and persuade their credit manager that you and your business are a good lending risk.


How to decide if debt funding or equity is the correct option

As I covered in detail in the second instalment of this blog, there is a range of factors to consider with both bank funding and equity funding.

It is also worth recognising that many businesses have both debt and externally sourced equity funding. So, the choice is not necessarily one or the other.

  • If keeping full control of your business equity is important to you, or at least retaining the maximum possible equity percentage, then debt funding may be a better option for you.
  • On the other hand, if you are looking for both funding and management/leadership/governance skills as a package, then certain providers of equity funding may be a better option.

No clear-cut rules can help you decide on bank debt funding, and/or equity funding. What is best for you and your business relates to your views, risk appetite and situation.


What professional help will I need to secure 1st and/or 2nd tier bank finance?

The sourcing of funding is critical to your business and your future. Investing in a specialist professional service is a smart choice.

The main areas where you are likely to need professional help are to:


Murray Fulton currently advises several clients on their banking relationships.  You can make an appointment for a no-obligation chat with Murray or contact him by email.

Don’t miss the first two articles in this Funding for Growth series:

#1 How to source funding from 1st and 2nd tier banks

#2 Debt or Equity Funding?

Download Murray’s Ebook, Funding For Growth.