Business plan key to bank financing

SMALL and medium firms should have a good business plan to convince banks to lend, said Raymond Bariou, senior deputy general manager at Baiduri Bank Bhd.

"I think the most important for SMEs is that once they have a good idea, a business plan is important to consider. (It should include) the environment, competition, the difficulties they will encounter, their banking needs, then they can go and see the banker," said Bariou.

From that point on, he said, the banker can evaluate the proposal then decide the type of financing needed.

During his presentation at the recent Asia Inc Forum's roundtable on local business development, he said the bank expects a client to have a good business plan, backed by documents on the cash flow, a gauge of the business' liquidity. From there, the bank can have a view of the relationship that it will have with the client, and suggest the proper financing tools for the SMEs.

"It is difficult for an SME to apply without the proper criteria because with that, what can happen is that we can apply them for an LC (letter of credit, a form of guarantee of payment issued by a bank on behalf of the SME) or we can put in place (another finance product), to help with their financing," said Bariou.

Asked whether Baiduri Bank plans to set up a separate division focusing on SMEs, he said that it isn't necessary due to Brunei's size. "We have an SME group within the corporate banking division and I believe it is better to leave the SME group there, so that it is easier for them to keep track of their colleagues, to be in line with what is happening in financing," he said.

He added that the SME division already tailor makes financial products to suit individual SMEs.

Earlier, an eatery owner said one of the biggest drawbacks in applying for bank financing is the red tape involved.

"Banks are still not efficient. There is a lot of repetitive red tape," he said, noting bank rules on SME financing are time-consuming, resulting in unnecessary costs for business owners. "The banks don't tell us everything we need at once. They waste time telling us that we have to fill in document A, and once we do, they say we need to fill in another document; one after the other instead of all at once and this wastes time," he said.The Brunei Times