Making Finance Easier for SMEs
12 October 2023
Alistair Doyle (UDC Finance Regional Manager – Commercial for Auckland and Northern Region) discusses how small and medium sized businesses can get the best out of a lender in these challenging financial times.
When considering finance as an SME, you will reap the benefits if you get the basics right first time. First and foremost, have a plan. Know where you want your business to go and what you need to do to get there.
“It is important that you demonstrate you know your industry. Successful SMEs tell us that you don’t need to know everything, but you do need to have the right people in your corner”, explains Alistair. “Successful SMEs also stress the importance of good financial reporting. Make sure you have all the relevant, up-to-date paperwork on your business’ finances. As a lender, we look at the so called ‘4 Cs’ when we’re assessing a credit application - character, capability, capacity and collateral”.
Getting the best out of a lender will be easier if you understand what information a lender wants from you. Some of the key information includes:
- A basic overview of your business and its owners
- Any key changes, past or proposed
- How your business works
- Regional and industry insights, and future plans
- How much finance you are seeking and what impact this will have on your business
- Financial information (see below)
- What security you are offering.
“A good lender should ask open questions and be a good listener”, Alistair states. “We’re interested in your medium to long term goals; we want to understand more than the single transaction”.
Financial information is key to lenders understanding your position and your ability to repay your loan. This financial information includes your balance sheet and profit & loss statements, your debtors and creditors, and your cashflow statements. A lender will also likely request financial projections.
“Finance providers like UDC need to be responsible lenders”, says Alistair. “Businesses often wonder why they are getting asked for projections when their business is making money. It is important to understand that profit is not cash. Cash is king, and it is required to pay your financial obligations ranging from loan payments through to wages”.
There are numerous types of loan payments and structures that can be considered for an SME, and a good lender will present the different options available to you. For example, UDC offers:
- Seasonal payments
- Balloon payment
- Interest rates, fixed or floating
- More sophisticated asset finance products as opposed to simple term loans.
It is no secret that times are currently tough for many businesses. UDC recognise this and have been supporting many of their customers through this downturn.
“Anyone can lend money in good times, but at UDC we pride ourselves on working with our customers, asking questions and looking for solutions”, Alistair explains. “Of course, we must have comfort that you understand your business and the implications you could be facing, but we want to work with you to come up with the best solutions. This involves having a good relationship and great communication from both parties; it’s a two-way relationship”.
If a SME gets the basics right, understands what the lender wants, understands their financial information, and clearly communicates this information, they are on the path to getting the best out of a lender in these challenging financial times.
The team at UDC Finance is focused on lending to key industries that are asset intensive and require specialist understanding, including the road transport industry which UDC has been working alongside for over eight decades. Contact details for all UDC Commercial Managers can be found on the UDC website. UDC representatives are located up and down the country, so you can in touch with your local representative, who understands your region, to have a chat and take it from there.
0800 200 UDC
Alistair Doyle joined UDC Finance in 2019, bringing more than 30 years of banking and finance experience to the team. Prior to his leadership roles, Alistair worked for more than 10 years in various relationship management roles across SME markets in Auckland at both the National Bank and ASB. In these roles, his prime focus was to work with business owners providing a wide range of tailored financial solutions.
This article is a general market commentary and does not constitute financial advice. UDC Finance Limited lending criteria, fees, standard terms and conditions apply to any loan.