When you open an account, the bank will want some references – even if you don't want any credit. If your business operates as a partnership, the bank will also want details of each partner's authority and a copy of the partnership agreement.
If you have set up as a company, the bank will need some more information. Typically the bank will want to see the certificate of incorporation, the memorandum and articles of association. In addition, the bank will usually have a draft resolution that must be passed by the company and gives instructions about opening the account.
If you want to use the loan for startup finance, you will need to present the bank with a detailed business plan. If you can, try and find your local business link or enterprise agency for advice beforehand. If not use family and friends to practice your presentation.
It will also be very hard to borrow from the bank without putting in some of your own money. Anyone considering lending to you will want to see that you have some of your own money on the line. The amount will vary in each case. However, the golden rule is enough to hurt.
The British Banking Association offers this list of key factors that a bank manager will be looking for:
Character. Is the customer trustworthy with a clean credit record?
Ability. What experience does the customer have in this line of business? Has market research been done? How good is this product?
Margin. How risky is the proposal and what interest rate would reflect this risk?
Purpose. What will the money be used for? Would a different type of finance be appropriate? Are there any government schemes to help?
Amount. Does the amount seem too much or too little? How much is the proprietor putting in themselves?
Repayment. Will the business be able to generate enough money to repay the loan and interest?
Insurance. If it all goes wrong, is there an alternative source of repayment?
This last clause refers to security. Banks generally want to link the loan to an asset that can be sold if the loan can not be repaid. This may take the form of property or a debenture – which allows the bank control over the business' assets, including any outstanding debts. However, this can only be applied to a limited company, see what form your business should take.
If your business does not own premises or can not offer a debenture, the bank is likely to look for personal guarantees or other investments you may have, such as stocks and shares. This may mean guarantees by third parties or a charge over your home and investments.