Campari: How to apply for a bank business loan

The Campari principle describes what banks look for in a successful loan application. Part one deals with opportunity; part two with risk.

Forecast Profit, Cash Flow and Borrowings

Campari alone is not enough. Negotiating business loans begins with profit and cash flow forecasts for one or more years ahead. Balance sheet forecasts illustrating the projected financial condition of the business are equally important.

When using Figurewizard to prepare profit, cash flows and solvency forecasts an initial effort will almost certainly call for the business plan to be revised. The unique What-If Calculator and Planner easily enables that with single clicks of a mouse. 

That done, what follows are questions that are likely to call for answers.

What is the Campari Principle?

Apart from forecasting that a business will be both profitable and solvent, there is a long standing principle illustrating what it takes to successfully negotiate a business loan application, known as CAMPARI:

Character Do you and your business plan come across as businesslike?
Ability How good are your track record, products and/or services?
Means Is business good (and profitable) enough to reassure the bank on risk.
Purpose What is the loan for and how will it improve profits, liquidity and cash flow?
Amount Is the loan sufficient to achieve its stated purpose?
Repayment Will forecast operating cash flow be up to servicing the loan?
Insurance What is your plan B?

Part One of the Business Plan - Opportunity

The first step is to evidence the benefits of the opportunity that the loan you are after will allow your business to exploit.

For example, if  the purpose of the loan is to finance the acquisition of new products to be purchased by letter of credit; what benefits would they would bring to their market and how competitive would they be in quality as well as price?

Part Two of the Business Plan - Cash

The second and most important Campari element concerns forecasting to address any lender’s first priority: That of “risk”.  

Banks in particular are not going to lend against uncertainties, no matter how attractive the opportunity. If your cash flow and other forecasts listed above do not satisfy the lender’s concerns on risk or are missing altogether, your application will fail.

Such forecasts can however be produced in a straightforward and comprehensive manner using Figurewizard.

What is your Plan B?

The bank will need to know that you are capable of seeing the business plan though but it will also want to know that if for any reason things do not work out as planned, their interests will be protected. That might mean personal guarantees.

How to Produce the Profit and Cash Flow Forecasts

Figurewizard will rapidly and inexpensively produce the necessary profit, liquidity and cash flow forecasts that are needed here and a lot more besides.

All you have to do is to enter your predicted figures for sales, margins, overheads and investment and the system automatically does all of the rest, including calculating and applying VAT and tax.

Try The Foreasts for Yourself

The links below will give you a clear idea how Figure produces the three most important elements of any successful Campari presentation – Profitability, liquidity and cash flows.

All of the sample forecasts on the site are interactive working examples which visitors can change. That includes the powerful What-If Calculator and Planner.

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