There are constants in our lives that we don’t often think will ever change. That’s the whole point of a constant isn’t it? Things like the sun coming up in the morning and setting at night. The changing of the climate from season to season. The love of a parent. These are (usually) permanent constants – unless you live in the arctic or Antarctic and have a strained relationship with your parents.
People make the mistake of thinking that some constants that have been there for a few decades (most, if not all, of their lives) are permanent. Things like a job that you’ve had for a couple of decades. Some marriages or other personal relationships. When we lose one of these temporary constants we’re usually shattered. The reason for this is that we have come to believe that these temporary phases in our lives would be there forever.
One such constant since WWII has been the availability of finance for most of our business needs. There was a time when you needed funding for a business venture you went to a bank and if the bank manager knew you and you were a good credit risk. You got the loan. All of that and more is still available to you. So, what’s changed? The banks have changed.
These days it’s not enough to have good credit, a good idea and adequate security. You need to be able to speak the language of the banks and sell them your story.
Why? Shouldn’t the bank have bankers that can translate my ordinary speech into bank jargon to get approval? No. Not anymore.
You see, there’s been a very deliberate – yet to most people, unknown – push by the banks to homogenise banking and bankers. People that think outside checklists and rules, people who can see through a profit and loss report, people who can give your application a fighting chance have been slowly and deliberately exited from these banks. They’ve been replaced by people who will follow processes set down by very expensive consulting firms.
These firms’ hold on our banks is so profound that quite a few CEO’s and senior management – in recent years – have come from their ranks. So, what do these highly paid senior executives do when they’re faced with the prospect of losses that usually manifests itself after an economic downturn? They de-risk. They remove any potential opportunity to lend unsecured to mums and dads. When they’ve put these policies in place, there is no longer a need for expensive, know-it-all bankers.
So, what? I hear you ask? Allow me to explain by providing you with a recent example. This one involves a couple of Sydney guys buying a bakery on the Gold Coast. Immediately, I can hear bankers switching off. The numbers were line ball at best. They had a very persistent accountant who believed in them. He had gone to several banks and been rejected. He was introduced to us by one of these banks to find private funding for them. We analysed the deal and spoke to our broking BDMs to try and find the right banker on the Gold Coast that would understand the experience these two guys would bring. The fact that they had a plan to cut costs by 30% and increase revenue by adding high margin produce to their product offering was a bonus.
We sent a few bankers a summary of the transaction. These have to be short as a banker will not read a 20 page tome for a $3M deal. We set up a meeting with the bankers from a major bank. At the last minute, we felt uncomfortable with them facing the grilling alone. We booked a flight and met with them 30 minutes prior to seeing the bank. We discussed a simple strategy for the meeting. After an initial 10 minutes of getting to know each other we let the clients speak for themselves only interjecting when our expertise was required.
Almost three hours later, the bankers were suitably impressed. Our clients, who had been rejected so many times, had hope again. We ensured that all information (1200 pages – see the article from two weeks ago) required by the banks – including letters from suppliers confirming the cost savings and from future clients professing their allegiance to our clients – was provided before the application went to credit.
Even with a cyclone going on, the bankers were so passionate about the transaction that they worked through. After three weeks of agonising wait, we received credit approval for our clients. The text that best summed it up for me from one of the two guys surpasses any financial reward that I have ever received. It’s what makes this lifestyle we’ve chosen worthwhile. I will only quote a few lines: “Mate, thank you so much. [Steve]* and I owe you both a great debt of gratitude. Our families also. To say you have clients for life would be an understatement. From our first discussion – as much as you – we were cautious. You made us feel confident.”
*Not his real name.
You see, this is our new constant – we’re hoping that it’s permanent. We now do things that are uplifting. Where we can, we change peoples’ lives. We’re currently on our conference looking for private funds in order to enable us to change more lives when we return. Next time you’re looking for funding, we invite you to speak with us. If we think you have a chance, we’d love to go on that journey with you.