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 Cash Flow and Borrowings

Figurewizard enables you to choose how much of a bank overdraft or alternative financing and for how long to make sure that your budgeted cash flow forecasts remain positive. What does it take though to get those loans? 

What is the Campari Principle?

There is a long standing principle illustrating what it takes to successfully present a business loan application, especially to a bank. This is described by the acronym CAMPARI as follows:

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?

Above all there is one thing that will persuade a bank as to the validity of your answers to the questions above and that is a professional and plausible set of profit, liquidity and cash flow forecasts. The links below will take you to examples of these.

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 What-If Calculator and Planner.

The Truth about Monarch Airlines Labour's Spending over 10 years from 2000 Business Planning and Forecasting: What to Look For. Credit Checking - How to Read Micro or Short Form Accounts Amortisation of Arrangement Fees for Long Term Loans BHS Profits Performance 2010 - 2014 BHS profits, liquidity and cash flows 2009 - 2014 How to Calculate a Free Cash Flow Forecast Campari: How to apply for a bank business loan What are Current Liabilities What are Current Assets Late Payers and Cash Flow What is Operating Cash Flow What is Working Capital How to Read a Balance Sheet Business Planning Cash Flow Calculator Short Term Liquidity Business Liquidity Corporation Tax is not Calculated on Net Profit Small Business Corporation Tax Cash Flow Calculator Using Figurewizard - VAT Using Figurewizard - Sales by Month Using Figurewizard - HP or Instalment Plan Budgets Using Figurewizard - How the budgeted cash flow forecast is calculated Using Figurewizard - Fixed Asset Budgets Using Figurewizard - Calculate Purchase of Goods Using Figurewizard - Forecasting Payments to Suppliers Using Figurewizard - How to Forecast Cash Collection Solvency and the Balance Sheet Property in the Balance Sheet Why Equity is a Liability Asset Management and Liquidity Selling Fixed Assets Contracts: Invitation to Treat What is Deferred Income Loss on the Sale of Fixed Assets Calculating Gross Profit Margin Profit and Loss Statement What is Operating Profit What is Net Operating Revenue What is Equity Profit on the Sale of Fixed Assets How Taxable Profit is Calculated What are Operating Overheads Overheads - Provisions Depreciation What is Business Operating Activity What are Fixed Assets