Some interesting information to come from last weeks Commercial Finance Conference at London's Olympia. Many delegates reported that several banks are not renewing businesses overdraft facilities for a full 12 months instead choosing to renew for just 3 or 6 months. It was suggested that this was to increase fee income, sometimes charging upto 2% every time the facility is reviewed.
The best advice we can offer here is to ensure that financial information is up to date. The absence of this information will give the bank an excuse to shorten the review period. The bank must be able to provide a very good reason for not committing the facility for a full year, assuming of course that the underlying business remains viable. If the bank has concerns about the ongoing safety of the advance then it is not unreasonable to seek regular updates and progress reports.
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