How to win financing from a bank without any hurdles – 5

The use of referees in order to secure a financing facility should be avoided. If other factors discussed previously do not exist, there is no way a good banker can grant you a facility just because you have been introduced by someone important. It is clearly stated in banking literature that it is advisable to deny credit facilities customers who use referees because it is a bad sign.

In my experience in the banking industry, I learnt that most of those who insist on using referees ended up being bad customers even when they met all the other requirements discussed previously. Being a transparent and honest partner, who adheres to regulations and has a good existing business are enough.

I have encountered customers who thought that just because they were introduced by prominent individuals, they could quickly secure financing. I sometimes called those who introduced them and asked them to provide personal guarantees or pledge cash collaterals and, not surprisingly, most of them refused.

Secondly, customers should make sure they avoid attempting to convince bankers that they urgently need financing. For bankers, this is a bad sign and experience shows that most of those who knocked on the doors of banks with these kinds of requests ended up becoming bad customers. No good banker will entertain you when you push a lot because it is a bad sign.

Customers should know that getting a bank financing facility is a process that involves various steps and approving authorities. Risk management in the banking industry before disbursing funds to customers is essential and must not be rushed through. Make sure that you start early enough and prepare well. This is important, especially when you are seeking financing for the first time. Procedures become less cumbersome when a good partnership is established.

Thirdly, attempting to bribe bank officials in order to secure financing is a no-no. This is dishonesty that is likely to end up in failure. Approvals involve many people. Are you going to bribe all of them? If you don’t qualify for conditions outlined in this series, there is no way you can qualify for a facility through bribes, unless, of course, when you happen to be dealing with an unethical banking environment.

My advice to customers who face demands for kickbacks is that they should keep the evidence and report the crooked staff. The good thing is that there are clear procedures for reporting such misconduct. We can fight this adversity by exposing those involved. Unless the whole chain of decision-making in a bank is involved, which is highly unlikely, this is a vice that can be stopped.

During my time in the banking industry I encountered a few cases of this kind of bank officials and all of them were dealt with appropriately and a clear message sent to the rest of the teams. These rotten apples must not be protected and customers must not bribe them and should instead strive to fulfil banks’ requirements.

Fourthly, make sure that you don’t have previous bad records in paying for your facilities. If you had performed poorly with another bank, be transparent and disclose your previous history because if you hide it, the credit reference bureau will expose you. If you are using other names and by any chance it is discovered, your reports will be tarnished and that will be the end of any possibility of securing financing from a bank.

Make sure that you adhere to the three basic factors – be a good partner, be transparent and be honest. Fulfil other essential factors outlined in this series and avoid what has been advised against and you can be sure that interactions with bankers will be smooth and the possibility of securing financing high.

Dr Muhsin Salim Masoud is a seasoned banker and academic, who has also served as managing director of the People’s Bank of Zanzibar and Amana Bank. [email protected]