Annual loan facilities review – what you need to know

Once a year, your Bank Relationship manager (BRM) will contact you to “have a friendly chat about your business”. This is bank-speak for your annual loan facilities review – of your overdraft and any other loans you might have with your bank.  As well as to check whether you still deserve them.

This is when you hand over a copy of your latest audited financials. If these financials don’t meet your bank’s (undisclosed) standards, they could well give you 24 hours’ notice to repay your overdraft. Plus a demand to submit a repayment schedule for any other loan facilities your company may have.

And don’t think that you can just go to the bank next door and get the same facilities. The first thing a bank does when you apply to open an account is to ask who your previous bankers were so they can send them a request for a full bank report. If that report is not glowing, your application to open an account may be refused.

But, should you be lucky enough that they agree to grant you replacement bank facilities, you will be pleased at the warm response you get. You’ll be treated like a king for the 2 or 3 months that it takes to get all your accounts opened, facilities approved, internet banking set up, etc. Soon, however, you will become that uninteresting creature known as an “existing client”. All of the warm, friendly smiles, support and help will disappear – and they’ll treat you exactly like your old bank did!

That’s because banks, and BRMs in particular, are well rewarded for obtaining new accounts. Unfortunately, they are not rewarded for retaining accounts, nor penalised for losing them. At the same time, the bank’s credit department is only rewarded for not losing the bank money – hence the high risk aversion to risk.


Garth Trumble


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