“Why should I work with an adviser in the process of seeking the necessary external funding? It’s an extra expense and I might be able to do it myself.”
You have already completed the process of submitting and obtaining a loan at the bank. And you certainly have a variety of experiences depending mainly on two main factors. The qualities of the people who have represented the bank in communicating with you and the bank’s lending policy. If you choose a proven and reliable consulting company, then you are sure that you will communicate with people who have extensive experience gained often through many years of work directly at a commercial bank. The risk of negative impact of the human factor is therefore greatly reduced when working with a consulting company.
Individual banks may have their lending policies and thus their preferences regarding the provision of loan products set differently. The conditions imposed by banks on the specific enterprises and projects they choose to finance, depend in particular on the bank owner’s attitude towards the local market. Taking into account its specificities and also on the overall position and focus of the group that owns the bank. To gain an overview in this area requires a considerable amount of activity and intensive communication with representatives of the bank, whether at the regional or central level of the bank. If an entrepreneur wants to choose the most suitable bank for his intentions in order to obtain financing under the most advantageous conditions. He faces the difficult task of checking his options in several banks.
And that is where the candidate for funding can most feel the added value of a consulting company. Advisers have an overview of banks’ current lending policy and know what the bank is focusing on and vice versa. Which is unlikely to be passable in a particular bank.
Based on this knowledge of the specificities of individual banks, advisers are able to determine which bank would be most likely to approve funding for a particular type of project. For the client, they complete the whole process of checking the possibilities up to obtaining an indicative credit offer. While for the client they process a comparison of individual offers and advise him on the selection of the best. Of course, most entrepreneurs have their preferred bank, which in the case of a new requirement tends to be prioritized. And in most cases, the bank will finance the project either after an easier or more difficult process.
However, in doing so, the entrepreneur is not capable to know under what conditions he could obtain financing in another institution. And is often reduced by the opportunity to save on the total cost of financing in a relatively common case. Where a competing bank can give the client more favourable conditions.
The fore-term information could therefore be summarised in such a way that, if the entrepreneur chooses to cooperate with an independent financial adviser, he obtains in particular:
Separately, we would mention entrepreneurs who are successful in their primary business. And from the accumulated resources they plan to invest and evaluate by implementing a project with which they do not yet have more extensive experience. But are convinced that from their point of view the project should have a positive effect. A specific example may be entrepreneurs from different sectors who decide to carry out a real estate project. Such as the construction of an apartment building, office space or retail rental space. In this case, cooperation and a consultancy company are even more relevant.
An experienced advisor can recommend the client whether the implementation of the project will be meaningful for him. Or how the parameters of the intention need to be adjusted to make it meaningful. The advisor will then help the client to gather all the necessary documents for the bank. Thus, the process of submitting a financing request, approval of it and drawdown of the resources is as simple and fast as possible. Thanks to the entrustment of these activities to the advisor, the client will avoid situations where there are deficiencies in the documents. Which leads to lengthening and complicating the whole process.
The cooperation of the client and the advisor is successfully completed by the credit drawdown and execution of the intention. But may not end completely at this point.
The financing bank then monitors the loan throughout its maturity at least on an annual basis by regularly reviewing the situation of the loan. And the development of the client’s business, which is usually called a review. If the entrepreneur is interested in covering the whole review process. The client’s advisor can relieve the entrepreneur a significant part of the activities that he would have to take towards the bank every year.
Within the Slovak market, consultancy in the field of financing projects and small and medium-sized enterprises is not yet more widespread. Given its above-mentioned benefits for entrepreneurs, it can be expected that it will become increasingly common and that it will find its rightful place.