Financial Guide for SMEs - SME Corporation Malaysia

Financial Guide for SMEsManaging Your Banking RelationshipsAnnual ReviewWhen you arrange for a business loan orother fi nancing through a bank for the fi rsttime, you may think that the process ofproviding information and being interviewedby the bank is over. This is not always thecase. When they have provided fi nance,banks may also carry out annual review. Thisusually happens either when your annualaccounts are available or on the anniversaryof the borrowing.Annual reviews should be taken seriouslybecause banks always have far-reachingpower to cancel a loan that they havegranted. The review results in a submissionto the bank’s administration, with themanager recommending continuanceor withdrawal of the loan. Although a reviewof this kind may appear traumatic, there isnothing to worry about if your business isperforming well, and it may result in anoffer of additional fi nancing. If the businesshas been successful, the bank may also bewilling to reduce its costs, but most likelyonly if you ask. If your business has not beenGood relationshipswith your bankerswill ensure that theyunderstand yourbusiness and are inthe best possibleposition to provideadvice and supportwhen neededHINTBeing well prepared forthe annual review willshow the bank thatyou understand theirrequirements and indicategood managementpracticesperforming well, and you have not previously advised the bank, you should beopen about the situation.TIPDuring the annual review, the bank is likely to require up-to-datefinancial data and all other relevant information that summarisesyour business operations for the last 12 months153chapter 7-13 p79-181 Eng.indd 1538/15/11 5:03:07 PM