Bank finance
Cash is the lifeblood of any business and most businesses need some financial help to get started, grow and develop. Finance for business comes in three different forms – equity, grants and bank finance. Before approaching the bank, first investigate the other forms of finance – grants and financial supports – available to you. Once you have organised either a grant and/or equity, you are more likely to be successful with any application to your bank.
As with securing funding from other sources, getting bank finance is essentially a selling exercise – you need to sell the concept of your business idea to the bank. Banks will assess the levels of risk of your proposal and need to satisfy themselves that the potential rewards match the risk – ultimately, does your proposed business venture have the capacity to repay the debt.
Different types of bank finance
Working capital finance - short term
| Product |
Description |
| Overdraft |
- Supported by all features of a business current account
- A flexible source of short term working capital finance
- No fixed repayment schedule
|
| Invoice Discounting |
- Confidential debt-financing facility
- Helps businesses overcome cashflow problems caused by overdue invoices, giving immediate access to up to 80% of invoiced debt.
- Repaid as debts are received
|
Capital finance - short to medium term
| Product |
Description |
| Term Loans |
- Fixed or variable interest rates
- Monthly repayments over a period of one to seven years
|
| Bridging Finance |
- Finance to fund businesses awaiting grant cheques or drawdown of approved commercial mortgages or loan agreements.
|
| Finance & Leasing Options |
- Finance to spread the cost of insurance, corporation tax or other annual payments.
- Equipment or Transport finance-allow repayments against your taxable profits.
- Hire Purchase-for the use of asset purchase
- Repayment over five years or life of tye asset
|
Capital finance - long term
| Product |
Description |
| Commercial Mortgage |
- Long term finance for the purchase of a business premises, refinancing an existing property or the ourchase of investment property.
- Three types - straightforward repayment, commercial endowment or a pension mortgage.
- Repayment over 15 years
|
| Fixed Asset Loan |
- 10 year fixed loan for fixed assets such as property, plant or machinery and pay for them over the period of their useful life.
- Option to postpone capital repayments for up to two years, where appropriate.
|
| Specialist |
- Banks will provide a range of specialist products & services to fund expansion or merger / acquisition plans.
|
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Is bank finance an option for you?
If you are thinking of bank finance as a source to part fund your business expansion, you will need to consider:
- Your capital need
- The type of finance you need – short term, medium term, long term. Short term assets should be financed with short term debt (i.e. debtors with overdraft) and long term assets with long term debt (i.e. buildings with mortgage).
- Your company’s ability to repay the loans within the required period
- Your personal financial position
- Your personal credit rating
- Terms and Conditions
- Risk
Where can I get more information?
Banks differ widely in terms of what they offer the small business sector, so it is important to talk to a number of them before making a decision.
You can click here for a list of bank contacts within Ireland who are members of the Irish Bankers Federation.